CLSA glimpses a 31% takeoff on stable deposits, robust credit card biz in RBL Bank

Investors rushed to acquire shares of RBL Bank on the BSE on Wednesday, steering prices as much as 8 percent higher to Rs 271, post foreign brokerage CLSA mentioned the bank is withstanding its wave of “second transformation”. The stock has jumped 13 percent in a couple of trading sessions in the past. In an announcement made on January 5, CLSA confirmed the bank is joining its product portfolio and is now also concentrating on key openings of its retail-asset. The bank assembled its credit-card and microfinance (MFI) business preceding three to four years and measured it further through tie-ups. This, they speculate, will steer the bank’s profits taking off forward. The merger of corporate book growth is investing the bank an opportunity to work on its liability franchise, and release on liabilities will be important to further refrain the brokerage as spoken of in the report. It started with the coverage on the stock with a ‘Buy’ rating and a target price of Rs 330, suggesting an almost 31 percent takeoff from Tuesday’s close.

CLSA mentioned that the IL&FS and YES Bank problem uncovered the bank’s large liability franchise, which guaranteed modification. The bank is presently directing on its Microfinance and credit-card portfolio for the growth to pull off the risk from their corporate books, which is decent in terms of the profits, and also for the recent growth phase to granules its liabilities, CLSA further added. The bank has counseled for 9 per cent-10 percent credit cost in the credit card business getting on forth and anticipates the suction in the card business to continue to stay strong. The traction in the business of the card has boosted from 80,000 per month a few months back to 1 Lakh plus on the monthly basis. Of this, around 60 percent is from the Bajaj Finance channel and 40 percent is from others, the management announced in a reviewers meeting held last month.

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