RBL Bank shares: Q2 beat, yet Goldman Sachs says sell; CLSA, Citi, Morgan Stanley targets

Morgan Stanley's Subramanian Iyer has an 'Equal Weight' rating on RBL Bank, with a target price of Rs 370. Investec's Parameswaran Subramanian cut his rating on the banking stock to 'Hold' from 'Buy', while maintaining a target price at Rs 440. ICICI Securities' Jai Prakash Mundhra also cut his rating to 'Add' from 'Buy', but raised his target price to Rs 460 from Rs 430 earlier. Similarly, Axis Securities' Jayant Kharote cut his rating on RBL Bank to 'Reduce' from 'Add', while retaining his target price at Rs 400.

Goldman Sachs' Sumit Kariwala has a 'Sell' rating on the stock, while CLSA's Piran Engineer has a 'Reduce' rating. Both have a target price of Rs 310, the lowest on the Street so far.

Citi's Kunal Shah has a 'Buy' rating on the stock, with a target price of Rs 505, the highest following the Q2 earnings so far.

Dolat Capital, which has a 'Sell' rating on the stock, said RBL Bank reported a marginal PAT beat, driven by higher-than-expected NIMs and lower operating expenses, partly offset by higher credit costs.

It said post the capital raise, return on asset (ROA) expansion will be limited, and return on equity (ROE) will remain subdued.  "We believe current valuations at 1.4 times FY28E P/B are adequately factoring normalized leverage levels but don’t reflect the pressure on yields/margins from declining unsecured mix.  We maintain our ‘SELL’ rating a target of Rs 340, implying 1.1 times FY28E P/B," it said.

Systematix, which retained 'Buy' on the stock said the RBL Bank's pre-provision operating profit (PPOP) beat was driven by operating expenses coming in 15.2 per cent below our estimate, which more than offset a 17.4 per cent shortfall in other income. Provisions, it noted, were 32.4 per cent higher than its estimates.

"We remain positive on RBL Bank due to: (1) its significantly strengthened capital position (CAR of 30.1%), which provides ample headroom for balance sheet growth, (2) the rising share of secured retail and wholesale in the loan mix, which lowers portfolio risk, (3) improving operating efficiency, with cost-to-income (C/I) falling to 56.5 per cent, and (4) sustaining asset quality. We maintain a ‘BUY’ rating on RBL Bank," it said while suggesting a target of Rs 505.

MOFSL said RBL Bank reported a healthy quarter, with in-line NII partly offset by higher-than-expected provisioning, driving a marginal earnings miss. NIM improved 48 basis points quarter-on-quarter (QoQ) to 4.61 per cent, with the full-quarter impact of capital infusion by Emirates NBD.

It said NIM may, however, moderate in the 3QFY27 before improving in 4Q on the back of gradual deployment of surplus liquidity and rate hike.

"Credit growth was strong, with the bank expected to continue its 22-25 per cent growth momentum, led by wholesale banking and moderate growth in unsecured book. On asset quality, slippages are expected to moderate after 1HFY27, with a reduction in slippages in credit card book and higher secured asset mix, which shall gradually support a reduction in credit costs," the domestic brokerage said.

It tweaked its FY27 and FY28 earnings estimates, factoring in operating leverage, partially offset by softer fee income, to suggest 'Buy' and a target of Rs 485 on the stock.

Nuvama is bullish on the stock. It said the ENBD acquisition and FCNR mobilisation mark a structural turning point, providing a durable funding advantage and scale with better margins. This coupled with improving asset quality should push RoA and RoE to 1–1.6 per cent and 7–11 per cent over FY27–29E, driving further re-rating.

It retained its ‘Buy’ call on the stock, with a revised target of Rs 500.