RBL Bank shares: Is it time to sell stock post Q3 miss? Here are target prices

Shares of RBL Bank Ltd will be in focus on Monday following 86 per cent slide in the December quarter net profit on higher provisions due to weakness in the micro finance segment. A few analysts believe the stock could stay under pressure in the short-to-medium term, as the bank expects the slippages to be broadly similar in the March quarter compared with the December quarter.

MOFSL said RBL Bank reported a large miss in Q3 earnings due to higher-than-expected provisions and a 14 basis points QoQ moderation in margins. Asset quality ratios deteriorated during the quarter as slippages were high, mainly in the microfinance segment.

“Deposits too saw a modest growth, with the CASA ratio moderating sequentially and leading to a C/D ratio of 84.7 per cent. Advances grew 3 per cent QoQ, and the comfortable CD ratio will further support credit growth. The credit cost was also high during the quarter due to the JLG book, and the management expects 4Q slippages and credit costs to remain higher,” it said.

The brokearge cut its EPS estimates by 8.6-10 per cent for FY26 and FY27 as the asset quality will likely remain suppressed given the stress in the MFI sector. It suggested ‘Neutral’ on the stock with a target price of Rs 170.

“In our view, RBL Bank stock will continue to see pressure in the near-to-medium term due to its 2 major verticals microfinance and credit cards seeing moderation in growth and asset quality stress. While the bank has increased its provision coverage to 82.2 per cent, in our view, additional stress in the unsecured segment will keep credit costs elevated. We downgrade the stock from ‘Hold’ to a ‘Sell’,” Nirmal Bang said.

As per the bank, the improving trend in December, which according to the bank should sustain and improve,
is likely to lead to material reduction in slippages from Q1FY26 onwards. RBL bank said it will be growing at a similar rate as in 3QFY25, in the near to medium term. It will revise its guidance after normalization in 1 to two quarters, it said.

“After incorporating the lower than expected results of 3QFY25 and our assumptions of lower loan CAGR of 11.8 per cent over FY24-FY27E and higher average credit costs of 2.9 per cent during same period, we have revised our PAT estimates downwards by 39.6 per cent, 20.4 per cent and 11.7 per cent, respectively. We have valued RBL Bank at 0.5 times December 2026E ABV, deriving a target price of Rs 144 against Rs 172 earlier),” it said.