Buy RBL Bank Ltd For Target Rs.200 - Motilal Oswal
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CASA-led strong growth in deposits
Advances witness a 3% QoQ growth; Wholesale reports higher growth than Retail
RBL Bank (RBL) released its quarterly update underscoring its 4QFY22 business numbers. Here are the key highlights:
* RBL reported an uptick of 3.3% QoQ (3.2% YoY) in gross advances to INR619.3b. Wholesale advances (6% QoQ) grew much faster than retail (1% QoQ). As a result, the mix of retail-to-wholesale moderated partially to 52:48 (from 53:47 in 3QFY22).
* The deposit base rose to INR790b, implying a growth of 7.3% QoQ (8.0% YoY). CASA reported a healthy 20% YoY growth (10% QoQ); TD rose marginally at ~3% YoY (~6% QoQ). Thus, the CASA ratio improved 90bp QoQ to 35.3%. Overall, retail deposits (as per LCR) showed healthy trends and grew at 10% QoQ (~13% YoY). RBL is continuing with its strategy to improve the share of retail deposits in the total liabilities.
* LCR for the bank stood at 140% (v/s 146% in 3QFY22).
* Valuation and view: RBL posted a loan growth of 3% YoY/QoQ. Growth in wholesale book was higher than retail. Deposit franchise is improving steadily led by robust growth in retail deposits. We maintain our BUY rating on the stock with a TP of INR200 (premised on 0.9x Sep’23E ABV).
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