RBL Bank jumps 5% to hit new 52-week high; surges 22% in past one week

Shares of RBL Bank rose 5 per cent to hit a fresh 52-week high of Rs 185.25 on the BSE in Friday’s intra-day trade on the back of heavy volumes.

In the past one week, the stock of the private sector lender has jumped 22 per cent as compared to a 2 per cent rise in the S&P BSE Sensex.

In the past three months, the stock has rallied 60 per cent as compared to a 6 per cent gain in the Sensex.

Further, during the last six months, it has more-than-doubled or zoomed 117 per cent vs a 15 per cent rally in the benchmark index. The stock has recovered 150 per cent from its record low level of Rs 74.15, touched on June 20, 2022. It had touched an all-time high of Rs 717 on May 28, 2019.

For the July-September quarter (Q2FY23), RBL Bank had reported a 554 per cent year-on-year surge in standalone net profit to Rs 201.55 crore as a sharp decline in provisioning for bad loans and healthy increase in net interest income boosted the private lender’s bottomline.

The massive year-on-year rise in net profit was also owing to a low base. On a sequential basis, the bank’s net profit was only marginally higher from Rs 201.16 crore a quarter ago.

According to the bank’s top management, provisions made for asset quality issues on account of the Covid crisis the same time last year were at Rs 651 crore. In the second quarter of the current year, the provisions fell to Rs 241 crore.

In Q2FY23, RBL Bank’s net interest income was at Rs 1,064 crore, up 16 per cent on year while the net interest margin was at 4.55 per cent.

The bank’s gross NPA ratio improved, falling to 3.80 per cent as on September 30 from 4.08 per cent a quarter ago and 5.40 per cent a year ago. The net NPA ratio, however, showed a marginal rise on a sequential basis.

As on September 30, RBL Bank’s net NPA ratio was at 1.26 per cent versus 1.16 per cent a quarter ago and 2.14 per cent a year ago. Also, the bank's provision coverage ratio, including technical write-offs, was at 84.3 per cent versus 85.3 per cent on June 30.

Motilal Oswal Financial Services (MOFSL) has maintained its ‘buy’ rating on RBL Bank with a target price of Rs 160 per share.

"RBK reported in line earnings in 2QFY23 led by lower provisions. Business trends were mixed with a loan growth of 12 per cent YoY and 4 per cent QoQ. It reported a steady improvement in headline asset quality (GNPA) along with a lower restructured book. However, net NPA ratio saw a moderate increase accompanied by a lower PCR. OPEX remains elevated as the bank continues to invest in newer areas of business and branch expansion", the brokerage said in its result update.

MOFSL expects the bank to end FY23 with 15 per cent growth and over 20 per cent growth from FY24 led by growth in retail as well as wholesale book. "We expect RBK to deliver a FY24E RoA/RoE of 1 per cent/9 per cent," it said.