IIFL has reiterated its Buy rating on RBL Bank and raised the target price to ₹300, indicating a 15% upside from the current market price of ₹260.70. Despite a 3% miss on pre-provision operating profit (PPOP), the bank delivered an 18% PAT beat, aided by lower provisions and improving asset quality trends.
The brokerage noted that while loan growth remained tepid at 9% year-on-year, largely due to a decline in the unsecured lending portfolio, the drag on earnings was offset by reduced credit costs. Following accelerated provisioning in Q4, credit cost fell to 1.9%, and IIFL expects further improvement to 1.8% in FY26, compared to 3.3% last year.
Looking ahead, IIFL expects Return on Assets (RoA) from PPOP to improve by 60 basis points to 2.5% by Q4FY26, driven by:
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37bps expansion in NIM,
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Recovery in fee income, and
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Opex moderation in the second half of FY26.
For the medium term, the brokerage projects RBL Bank to deliver average RoA/RoE of 1.2% and 12.2% over FY27–28, reflecting improving fundamentals and a gradual return to profitability.
Disclaimer: The brokerage view is based on publicly available research and does not constitute investment advice. Please consult a certified financial advisor before making any investment decisions.
