RBL Bank is India’s leading private sector bank which has been recently impacted by spike in bad loans to 3 – 4 stressed accounts. Higher provisions for these NPAs has severely impacted the performance in the current year. The management is confident that elevated credit costs will subside from FY21 however, the street is not convinced. The covid pandemic has worsened the outlook for bad loans and the accurate NPA provision will emerge only after RBI directed moratorium is lifted and borrower is obligated to start repaying principle and interest. On the positive side, the bank is well capitalized and more than adequate liquidity. We have a neutral weight rating on the stock due to cheap valuations and steady growth in the underlying business. – 28-07-2020 Price: 181.00 Rating: Neutral Weight Recommendation: Hold
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