RBL Bank’s shares dropped more than 14% on Monday, reaching a 52-week low of Rs 176.50. As of the filing deadline, the shares were trading at Rs 176.39.

Following the release of the company’s quarterly earnings, shares began to decline. The bank recorded Q2 FY25 profit after tax (PAT) of Rs 223 crore, a 24% year-over-year reduction. Despite this, the bank’s net interest margins (NIMs) remained at 5.04% and its net interest income (NII) increased by 9% year over year to Rs 1,615 crore.

During the quarter, operating profit increased by 24% YoY to Rs 910 crore, indicating strong operational performance. RBL Bank’s net profit for the half-year period increased by 2% year over year to Rs 594 crore, and its net interest margin rose to 5.35%.

This quarter, RBL Bank had difficulties as problems with asset quality affected important profitability categories. Consequently, we are reducing our projections for loan growth to a 16% CAGR for FY24–27, which is less than the bank’s anticipated growth of more than 18%. Our revised RoA projection for FY26/27 is an average of 1.1%, which is less than the management’s goal of +1.3%.

“We are lowering our target P/ABV multiple from 1.25x to 1.0x in light of delays in achieving the expected return profile and the broader sector’s valuation pressures,” said the Centrum research study. Although RBL’s stock has dropped more than 17% FYTD25 (compared to an increase of ~11% in NIFTY and 20% in NIFTY Midcap), we think that worries about profitability, asset quality, and growth have mostly been factored in. Although there have been setbacks due to both external and internal issues, the management’s long-term plan for attaining sustainable and diversified development is starting to take shape.”

“We view the stock as an attractive BUY opportunity given that it is trading at an attractive 1HFY27E P/ABV multiple of 0.7x,” the research said. We have updated our forecasts to reflect the effect of strategic initiatives and the success made so far. As a consequence, earnings revisions for FY25E and FY26E are -18% and -18%, respectively.”

Over the last year, the shares of RBL Bank have returned minus 26.77%.