Why did RBL Bank share price jump 7% despite an 80% drop in Q4 net profit? Key reasons explained

RBL Bank share price today: Despite a sharp drop of over 80% in its consolidated net profit for Q4FY25 (March quarter), RBL Bank’s share price kicked off Monday’s trading session positively and continued to build on gains during early trade, spiking 7% to the day’s high of ₹201.25 per share.

The bank, post-market hours on Friday (April 25), reported a standalone net profit of ₹68.7 crore in Q4. In the same period last year, the bank reported a net profit of ₹353 crore, reflecting an 80.5% drop on a YoY basis, impacted by higher credit costs, which came in at 3.4% vs. 2.0% in Q4FY24 and 5.3% in Q3FY25.

Even with the significant fall in net profit, the numbers came in line with analysts' estimates. Domestic brokerage firm Centrum Broking said that RBL Bank’s results for Q4FY25 were broadly in line with their expectations, with a beat on non-interest income (NII), offset by elevated credit costs — a recurring theme.

The brokerage said that the bank has increased its PCR by 700 basis points QoQ to 89%, thanks to the utilization of contingent provisions ( ₹2.73 billion). Encouragingly, there are early signs of asset quality improvement: gross slippages declined 130 basis points QoQ, and the SMA pool for the JLG book reduced to ₹3.8 billion from ₹5.5 billion.

Combined with seasonal recovery tailwinds, this led to improvements in GNPA and NNPA ratios, which are now at 2.6% and 0.3%, respectively, the brokerage said. Management’s commentary suggests that the worst of the credit cost cycle is behind us, and FY26 is expected to be materially better in terms of growth and profitability.

The brokerage acknowledged the strengthening of the balance sheet and early operational improvements. Additionally, it aligns with the view that the MFI cycle is turning, setting the stage for stronger business momentum and lower credit costs in 2HFY26.

Brokerages raise target price for RBL Bank after Q4 results

Following the RBL Bank Q4FY24 numbers, Motilal Oswal increases its EPS estimates by 12% each for FY26/FY27, as business growth is gaining traction and slippages are expected to normalize by 2QFY26. The brokerage also estimates the C/I ratio to improve to 61% by FY27. 

It estimates FY26E RoA/RoE at 1.2%/12.8%. The brokerage upgrades RBL Bank from 'Neutral' to 'Buy' with a target price of ₹220 (premised on 0.8x FY27E ABV).

"RBL Bank reported beat in earnings, with margins remaining broadly stable. Asset quality ratios improved during the quarter, with NNPA on the JLG business being nil, following a 100% provision on this business," said Motilal Oswal.

Centrum Broking also maintained its 'buy' rating on the stock with a revised target price of ₹232 (previous target: ₹231) at a recommended P/BV multiple of 0.8x.

The brokerage’s optimistic outlook on the stock is underpinned by sub-par returns below CoE, necessitating a discount to BV; gradual improvement in RoAE and operational efficiency, coupled with current valuations, justifying a positive recommendation; and early signs of stability in asset quality in the unsecured portfolio. One more washout quarter is expected.

RBL Bank Q4FY25 results

Net Interest Income (NII) of the bank came in at ₹1,560 crore (down 2.5% YoY/down 1.3% QoQ), in line with Centrum Broking estimates of ₹1,580 crore. PPoP stood at ₹880 crore, down 2.3% YoY/up 1.3% QoQ, owing to an uptick in NII, which was better than the brokerage expectations of ₹810 crore.

RBL Bank has guided for 16–18% loan growth in FY26, led by 25–30% growth in the secured RA segment and 10–12% in wholesale. The brokerage expects NIMs may face pressure in FY26, and OPEX growth will remain controlled.

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