RBL’s shares dropped 4.06 percent to Rs 148.70 on the BSE, bringing its total decline for the year to 47.71 percent. RBL Bank is valued by Nirmal Bang at 0.6 times its September 2026 adjusted book value (ABV), as opposed to 0.75 times its previous September 2026 ABV.
After RBL Bank Ltd. announced that it has reached a mutual agreement with its co-branded credit card partner, Bajaj Finance Ltd., to cease issuing new co-branded credit cards under the relationship, the bank’s shares fell 4% in Monday’s trading. One of the main explanations was that Bajaj Finance intended to completely leave the co-branded credit card business line segment.
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RBL’s shares dropped 4.06 percent to Rs 148.70 on the BSE, bringing its total decline for the year to 47.71 percent. According to analysts, the bank has chosen to reduce the number of new cards it issues each month from about 2 to 2.5 lakh to about 1 lakh. According to Nirmal Bang Institutional Equities, this reduced the economic viability of the new Bajaj Finance co-branded credit card origination.
We have lowered our loan growth estimate for FY25E from 15.4% to 13.2% because it will be influenced in the near future. The overall cost of origination is anticipated to rise somewhat as direct sourcing becomes more prevalent. Customers who now have co-branded credit cards from BFL and RBL Bank will be monitored for attrition over time, according to the brokerage.
For FY25, FY26, and FY27, the brokerage has lowered its RBL Bank earnings projections by 2.4%, 3.4%, and 3.3%, respectively. “In the long term however, we expect RoA and RoE to improve to 1.2 per cent and 13.1 per cent in FY27 on assumption of loan and earnings CAGRs of 15.5 per cent and 27.2 per cent over FY24-FY27E, improving cost ratios and credit costs,” Nirmal Bang stated.
According to MOFSL, RBL Bank has made great strides in expanding its credit card business over time. According to the bank, the decision to terminate the agreement and lessen its need on BFL is a component of its endeavor to expand its operations through a greater variety of direct channels and more recent collaborations in order to have a more varied sourcing base.
The bank has advised growing the card business at a rate of 10–15% in order to make up for the lost volumes by the fourth quarter of FY25. The bank does not expect this move to have a major impact on profitability. According to the management, the bank is seeing an improvement in the quality of its assets in this area and anticipates normalization in the upcoming quarters. We reduced our FY25/26E PAT expectations by 5%/15% as a result of reducing our growth and margin projections,” MOFSL stated.
With a revised target price of Rs 170, this brokerage remains ‘Neutral’ on the stock.
In contrast to the previous target price of Rs 219, Nirmal Bang valued RBL Bank at 0.6 times September 2026E adjusted book value (ABV) as opposed to 0.75 times September 2026E ABV.
According to reports, Morgan Stanley has proposed a target price of Rs 180. In terms of credit card issuance, it was indicated that Bajaj Finance was a sizable channel for RBL Bank, and the recent action might limit RBL’s prospective credit card market share in the medium run. According to reports, Investec recommended a target of Rs 170. In FY25, it predicts that headline credit growth would slow by 200 basis points to 13–14% YoY.
