Morgan Stanley has an Underweight rating on RBL Bank, with a target price of ₹180, expressing concerns over the impact of its discontinued co-branded card partnership with Bajaj Finance. This partnership was a significant channel for RBL’s credit card issuance, and its exit could constrain RBL’s potential market share in credit cards over the medium term.
The brokerage highlights that while RoA for RBL’s credit card portfolio could improve, the overall impact on medium-term earnings growth is negative. It also flagged challenges in RBL’s microfinance (MFI) segment as an additional drag on earnings. Morgan Stanley estimates that RBL’s Return on Equity (RoE) could remain below its Cost of Equity (CoE), keeping valuations subdued at 0.6x book value.
The credit card business has been one of RBL’s fastest-growing segments. The exit comes as the bank navigates tighter regulatory norms for co-branded arrangements. Recent management commentary suggests a focus on expanding new partnerships, but execution risks remain.
