RBL Bank Ltd.

Riding on high growth momentum…

RBL Bank Ltd. has emerged as one of the fastest growing private sector banks with a network of 215 branches and 374 ATMs.

The transformational journey of RBL Bank started in 2010 when the new management team took charge led by MD & CEO Mr Vishwavir Ahuja, who was previously serving as MD & Country CEO of Bank of America for the Indian subcontinent. Under his vision and leadership, the bank has repositioned itself from being a traditional bank to a new age bank competing with other private sector banks. The bank is increasingly focusing on the lucrative retail segment instead of focusing on just corporates and SMEs. Further, the bank has invested significantly in technology, network, human capital and risk management over the past six years. Hence, we believe the bank has a promising future and is well positioned to tap the strong growth opportunities available in the banking space.

Valuation:

We expect the bank to deliver 37% earnings CAGR over FY17-19E coupled with improving return ratios (RoE of 16.3% and RoA of 1.2% by FY19E). We believe higher earnings growth, steady asset quality, improving business mix and loan growth above industry average will continue to drive re-rating of the stock. Further, RBL Bank will retain the tag of “one of the fastest growing banks” over FY17-19E given its strong footprint across all the business segments. Thus, we recommend a BUY rating and assign a TP of Rs630 (P/ABV of 4.5x for FY19E).

Research Report RBL Bank Ltd

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