Shares of RBL Bank moved higher in early trade after global brokerage Investec initiated coverage on the stock with a Buy recommendation and a target price of ₹430. As of 9:51 AM, the shares were trading 2.75% higher at Rs 311.95.
Investec’s positive stance follows a detailed interaction with RBL Bank’s management, which highlighted strengthening balance sheet metrics, easing funding costs, and a clearer growth trajectory. According to the brokerage, the bank plans to deploy about $1.5 billion from its recent $3 billion capital infusion to retire high-cost liabilities. This move is expected to significantly lower funding costs and could pave the way for credit rating upgrades from AA– to AA+/AAA. Such an upgrade would narrow the wholesale funding cost gap between RBL Bank and larger private-sector peers, supporting a sustained improvement in profitability.
On the growth side, management has guided for loan growth of around 30% in FY27. This expansion is expected to be driven by wholesale lending, prime housing loans, and a gradual recovery in unsecured retail segments. Investec believes this diversified loan mix, along with a rising proportion of secured assets, will enable healthier and more resilient balance sheet growth over the coming years.
The brokerage also assessed the impact of the new Expected Credit Loss (ECL) norms, scheduled to come into effect from April 2027. Management expects a one-time impact of ₹15–17 billion, equivalent to roughly 4% of post-dilution net worth, along with a 20–25 basis point increase in credit costs on a steady-state basis. However, this impact is likely to be partly offset by faster growth in secured lending, which typically carries lower risk weights and improves overall asset quality.
Looking ahead, Investec forecasts RBL Bank to deliver a robust 27% loan CAGR and a strong 44% PAT CAGR over FY26–FY28E, with return on assets (RoA) estimated at 1.4% in FY27E. At close to 1x FY27E price-to-book value, the brokerage sees the stock as reasonably valued with a comfortable margin of safety, reinforcing its positive investment view.
