At a Glance
RBL Bank has been around since 1943, but investors started noticing it only after it tanked 70% between 2019–2022. Now, with net profit of ₹717 Cr in FY25 and a sub-book valuation of 0.89x, the stock screams “undervalued.” But then again… it’s also sitting on ₹97,213 Cr in contingent liabilities 😬
🏛️ 1. Business Snapshot
RBL Bank = 5 business verticals:
- Corporate Banking
- Commercial Banking
- Branch & Business Banking
- Retail Assets
- Treasury & Markets
📍 HQ: Mumbai
🏦 550+ branches
💳 Known for credit cards + MSME lending
📉 But also infamous for past NPA spikes and sudden CEO exits
📈 2. 5-Year Financials: Not Bad, Not Great
| ₹ Cr | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 8,676 | 8,445 | 9,677 | 12,394 | 14,041 |
| Net Profit | 529 | -166 | 920 | 1,260 | 717 |
| ROE | 5% | -1% | 7% | 9% | 5% |
| EPS | ₹8.85 | -₹2.77 | ₹15.34 | ₹20.82 | ₹11.80 |
| Deposits | ₹73,055 | ₹79,006 | ₹84,875 | ₹1,03,470 | ₹1,10,933 |
🎯 Deposits are growing
📉 But profits down 43% YoY in FY25
📉 ROE at just 5% (vs 15–20% for private bank leaders)
🧨 3. The Contingent Liability Bomb
- Total Contingent Liabilities: ₹97,213 Cr
- That’s 7x their annual revenue
- Mostly in derivative/guarantee exposure and pending legal matters
This doesn’t mean they’ll have to pay it all.
But if even a fraction goes south, it could crater earnings.
💰 4. Q4FY25 Snapshot
| Quarter | Revenue | Net Profit | EPS |
|---|---|---|---|
| Dec 24 | ₹3,537 Cr | ₹47 Cr | ₹0.78 |
| Mar 25 | ₹3,477 Cr | ₹87 Cr | ₹1.43 |
📉 EPS crashed from ₹6.02 in Jun 24 → ₹1.43 in Mar 25
😵 Interest margin negative in 4 of last 5 quarters
🏦 5. Asset Quality & Capital
- 🧮 Gross NPA: Not disclosed here (but under control as per concalls)
- 🛑 ROA still under 1%
- 🏦 Advances ~₹75,000 Cr
- 📈 Loan book: Retail-heavy, but largely secured now
- 📉 Net Interest Margin (NIM): Depleting fast
- 🧾 Interest cost is climbing, spread is shrinking
📊 6. Valuation vs Peers
| Bank | P/E | Price / Book | ROE | Net Profit (TTM) |
|---|---|---|---|---|
| HDFC Bank | 21x | 2.6x | 15%+ | ₹77,000 Cr |
| ICICI Bank | 20x | 3.0x | 18%+ | ₹30,000 Cr |
| IDFC First | 18x | 1.5x | 12% | ₹3,600 Cr |
| RBL Bank | 19x | 0.89x | 5% | ₹717 Cr |
🔍 Cheap on book, not so cheap on earnings
💥 Market pricing in a turnaround — but is it real?
📉 7. Shareholding Shakeup
| Category | Sep 23 | Mar 25 |
|---|---|---|
| FIIs | 30.0% → 14.4% ❌ | |
| DIIs | 19.1% → 20.8% ✅ | |
| Public | 50.5% → 64.3% 😬 |
FIIs bailed. Public bought the dip.
The question is — was it a trap or a treasure?
🧮 8. Fair Value Estimate (EduMath)
Assume sustainable EPS of ₹13 and 0.9x–1.2x book:
| Basis | Metric | FV |
|---|---|---|
| Conservative | 0.9x Book (₹255) | ₹230 |
| Base Case | 1.0x Book | ₹255 |
| Optimistic | 1.2x Book | ₹305 |
🎯 Fair Value Range: ₹230 – ₹305
(Current Price: ₹228 = lower end, value buyers sniffing around)
⚠️ 9. Key Risks
- ⚠️ EPS volatility (down 40% YoY)
- 💥 Contingent liabilities
- 🧾 Negative financing margins in many quarters
- ❌ Past governance issues (CEO exit, RBI restrictions)
- 🚧 Low Return Ratios despite capital base
📦 10. EduTake: Buyout Bait or Value Trap?
RBL Bank is:
✅ Cheap
✅ Asset-quality improved
✅ Retail-focused with secured loan book
✅ Book value ₹255, trading at ₹228
But:
❌ ROE is a joke
❌ EPS tanked in FY25
❌ Contingent risks loom large
If you’re hoping for a buyout (à la Kotak buying ING), it might just sit on hope.
If you’re value hunting, this is definitely interesting — but you better have nerves of steel and a 3-year horizon.
✍️ Written by Prashant | 📅 June 22, 2025
Tags: RBL Bank, private banks, undervalued stocks, contingent liabilities, FY25 results, cheap bank stocks, turnaround candidates, retail banking India, credit card lenders, EduInvesting banking series
