RBL BANK - Is it a Good Long Term Story?

@spvk1 Can you throw some light on how the BC(Branch Correspondent) and CSP(Customer Service Point) works if you have studied the same or have insights on those for RBL Bank? What is the process? How is the manpower gets utilized?

Just want to know why in RBL promoter holding is Zero?
Institution holds around 26 % of shares , which seems good. Zero promoter holding - Isn’t it Risky for investors ?
Is there anything I am missing here. Can someone please share views on Zero promoter holding in RBL. Thanks.

Please refer to the IPO red herring prospectus
Company Promoters:

RBL is a professionally managed company and does not have an identifiable
promoter in terms of the SEBI Regulations and the Companies Act, 2013.
Consequently, it has no ‘promoter group’ nor any ‘group companies’ in terms
of the SEBI Regulations.

Hence, promoter share is zero.

The bank does not have any identifiable promoter. It counts marquee
investors such as HDFC, HDFC Bank, International Finance Corp (IFC),
Norwest Partners, Faering Cap, Samara Capital, TVS Capital, Aditya Birla
PE, IDFC Investments among its shareholders.

Led by Vishwavir Ahuja, the bank has a strong management team in place,
which has been instrumental for its growth. We have countless examples of
what wonders professional and top quality management can do to a business,
particularly so in the financial services space. Just in the Indian
context, names like Aditya Puri (HDFC Bank), Rana Kapoor (Yes Bank), Romesh
Sobti (Indusind Bank), V Vaidyanathan (Capital First) immediately come to
the mind, who have shaped companies to becoming highly profitable and


Also look at shareholding pattern of ICICI Bank.

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Many Thanks Praveen for the useful information.

SBI launched its digital one stop shop app last week and from what I know the feedback is quite good. Obviously SBI will remain behind others in digital but they have most to gain given existing inefficiencies and in many ways they are breaking the glass when it comes to digital thinking. For example the financial Superstore they are building…

We expect 30-35% annual growth going forward: Vishwavir Ahuja, RBL Bank


RBL Bank reports advances growth of 38% in Q3 FY18, Operating profit increase of 42% and
Net Profit increase of 28% at Rs. 165.33 crore on a YoY basis.
Gross NPA increased to 1.56% as at December 31, 2017 against 1.06% as at December 31, 2016. Net NPA
increased to 0.97% as at December 31, 2017 against 0.52% as at December 31, 2016.


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Results have been bad in my opinion. 60 % increase in other expenses, more than double provisioning write offs, steep increase in NPA ( though company highlights due to single account n expects to resolve by q4). The only heartening factor was higher growth of retail book n retail is 1/3rd of loan portfolio now though it’s not the best of retail assets but at least from diversification perspective , it is better


Results out. Overall looks good but need to check in detail:
37% PAT growth . Absolute as well as % GNPA and NNPA down



Some important numbers and notes from concall -

  • CASA 24->28% qoq, retail segment doing well, expecting this to continue doing well
  • NIM up 51bps,
  • cost/income to reduce going forward,
  • ROA/ROE to improve further going forward,
  • credit card division doing well. Lots of opex going into this, profitability comes with scale, will stop at 7-8% of loan book max (current - 5%), partnership model with Bajaj doing well.
  • well capitalized (no cap. required for 1.5-2yrs),
  • operational leverage at play (rev rising more than costs),
  • strategy to lend for working capital requirements to continue as this being safer based on operating cash flows,
  • NPAs are reducing, further reduction expected
  • expecting 40% loan book growth in micro-finance segment; not much opex required here as they are following banking correspondent model
  • expecting credit costs to come down in FY19
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Interview of Mr. Vishwahir Ahuja after Q42018 on Bloomberg on growth outlook

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Summary of Q4 Concall (courtesy: capital market):

  • The bank has continued to maintain strong growth momentum across all businesses, while the performance is on track to achieve vision 2020 targets.
  • The loan book of the bank has surged 37% end March 2018 over March 2017, driven by 33% growth in the wholesale segment loan book and even stronger 42% jump in the non-wholesale loan book.
  • The deposits of the bank has increased 27%, with CASA deposits even rising at higher pace of 40% and gaining share in overall deposits to 24.3% from 24% a quarter ago.
  • The bank has posted robust revenue growth of 38% in Q4FY2018 and even strong at 43% in FY2018. Net interest income of the bank has jumped 42% in Q4FY2018 and 45% in FY2018.
  • The bank has been consistently improving its net interest margin to a high level of 3.98% in Q4FY2018 from 3.89% in Q3FY2018. For FY2018, the bank has improved net interest margin by 51 bps to 3.8%. As per the bank, an improvement in margins is contributed by higher CASA ratio and favourable change in business mix.
  • The bank has posted strong 32% growth in the core fee come in Q4 FY2018 and strong 41% surge in FY2018.
  • On expenses front, the bank has improved its cost-to-Income ratio by 42 bps to 53% FY2018. The bank is on track to reduce cost-to-income ratio to 51% by FY2020.
  • Net profit of the bank has jumped 37% to Rs 178 crore in Q4FY2018 and 42% to Rs 645 crore in FY2018.
  • The bank has improved return on assets to 1.21% in FY2018 from 1.08% in FY2017. The bank has also continued to improve return on equity to 10.9% in Q4FY2018, while the bank proposes to further improve return on equity to 13.5% by Q4FY2019.
  • The bank has witnessed marginal decline in loan yields in the wholesale loan segment, while the bank has raised its MCLR lending rate by 30 bps in Q4FY2018 which is expected to contribute to improvement in yields, going forward.
  • Within the non wholesale loan segment, the bank has posted robust 66% growth in the retail loans, while development banking and financial inclusion loan have also jumped 38%. The major contributors to the strong growth in the retail loan segment are loan against property, personal loans and credit cards.
  • The bank has added 2 lakh new credit cards in the quarter ended March 2018, taking the overall card base to 8 lakh. As per the bank, it is among the top 5 players in the cards business in terms of cards issuance and card spending.
  • The bank expects to add 1 million credit cards in FY2019. As per the bank, it requires to touch a 3 million cards base to generate top RoE levels. The credit card outstanding amounts to 5.5% of the overall loan book. Bajaj Finance co branded credit cards accounts for 35% of the overall cards base.
  • The microfinance loan segment has continued to exhibit recovery which has posted strong 65% growth in the loan book. The bank has expanded its microfinance network to 19 States, while none of the state contributes more than 15% of the microfinance loan book. The bank has added 6 new states and 1200 business correspondents to its microfinance network in FY2018.
  • The GNPA of the microfinance loan segment has declined from 5.17% end December 2017 to 4.07% end March 2018. As per the bank, about 90% of the overall microfinance loan book is sourced post demonetization period, which has a strong collection performance of 99.7%.
  • The agricultural loan book of the bank is in caution mode, on account of loan waiver and other stress. The GNPA ratio of the agriculture loan sector has increased to 4.15% end March 2018 from 2.89% a quarter ago, while the share of agricultural loan book in the overall loan book has declined below 5% from 7%.
  • On asset quality front, the bank has exhibited healthy 26 bps decline overall stressed assets to 1.48% end March 2018 from 1.74% end December 2017.
  • As per the bank, the impact of 12 February RBI circular on revised framework for resolution of stressed assets was minimal. The bank has substantially improved its provision coverage ratio by 5 percentage points to 58% in Q4FY2018. Going forward, the bank expects its credit cost to decline in FY2019.
  • The bank do not expect any capital infusion requirement for next 7 to 8 quarters

Abhishek - Excellent summary. Appreciate.
What could be possible reasons for continued under performance of RBL Bank on stock price front? Could you please enlighten with your experience?

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I don’t know for sure, but it is possible because after the IPO a fair number of investors who held the shares pre-IPO may be interested in booking profits. Another factor was the poor market sentiment about MFI space, in which RBL has a good stake. Also, the valuation is not very cheap either. But, in my opinion, for strong companies, such time-wise corrections are good opportunities to buy and hold for the long term. They tend to be very good compounded returns.


@Yatharth Adding to @basumallick comments, adding last 3 years of weekly chart.

As he said, good companies also go through their own way of time based consolidation, the chart reflects it well. 1 year back when prices doubled in a year, book value shoot up to 5+ and then we had MFI , increase in NPA etc. which lead to some fall and time correction which is evident in chart. Now, based on q4 analysis of market and company, I infer the following:

  1. As committed in Q3, NPA both at absolute and % levels have decreased
  2. The trouble making account which led to rise in NPA is settled as per interview and concall
  3. Growth is continuing
  4. All key margins improving
  5. Retail and Cards book doing well and their share in overall business continuously increasing
  6. MFI industry is back to 99% collection and 30%+ growth
  7. Book value is almost under 4 and growth prospects looking good
  8. The perils of PSU banks can add more opportunities to private banks including RBL
    So, headwinds seems to be over and tailwinds in flow though we need to continuously monitor our scripts. So, this summarizes the fundamental information

Now, though, I am a beginner, taking a shot at the chart technically.
As you can see , the script has undergone 1 year of consolidation, time correction with 10-20% of fall range. There are 3 lines which are trying capture short, mid and long term price moving average and ideally if the longer duration line is above shorter, stock seems to maintain its uptrend. I see the RED and BLUE line gap contracting during consolidation but RED line never breaching below BLUE and off looks like it was about to kiss BLUE line but went up which means short term bullishness regenerated. Now, considering all fundamentals going well again, this RED and BLUE line gap to increase again which means the stock should create fresh high with 550 and 600 as resistance zones and 500 and 450 as support zones. If moving averages and fundamentals work in sync, I am expecting a bounce back from 500 level if it goes till 500. The momentum and other metrics also look supportive though I do not understand them in total detail. Lets see how story unfolds


Do you know troubled/NPA account for this bank?

Bank is typically bound by confidentiality not to reveal names. Many times it can be inferred if the account is large enough and other lenders also have exposure.

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I see a lot of comparison between Yes Bank and RBL. RBL is the new kid on the block so to say. The stock price increased dramatically along with Bank Nifty. The Bank Nifty itself has been on a consolidation mode for some time. So has RBL. RBL is now range bound between 500 to 540 … and has attempted to cross above 540 many times without being able to sustain these price levels. On the lower side, 460 and 420 are good support levels.

For a strong multi-bagger candidate, it may be a good idea to accumulate via SIP till the scrip gathers momentum (in the current scenario, first signal will be a break above 540 and second signal will be a break and sustaining above 600 levels). Currently the stock is in bearish mode (50 dma is below 200 dma) …


Rajeev Ahuja in an interview on Bloomberg TV on Vision 2020 of RBL Bank