RBL Bank Share Price: Should You Buy After Q1 FY26 Profit Decline?
RBL Bank’s Q1 FY26 net profit fell 46% YoY, raising concerns for investors. This article analyses the RBL Bank share price outlook, reasons for the profit fall, and expert recommendations.
Table of Contents
Introduction
RBL Bank, a leading private sector bank in India, has been in focus after announcing its Q1 FY26 earnings. The results showed a significant decline in profitability despite stable operational performance, raising questions on the bank’s growth trajectory and share price outlook.
RBL Bank Q1 FY26 Results Summary
Net Profit: ₹202 crore (down 46% YoY)
Net Interest Income (NII): Grew by 5% YoY to ₹1,527 crore
Gross NPA Ratio: Improved to 3.12% from 3.22% last quarter
Net NPA Ratio: Fell slightly to 0.73% from 0.78%
The decline in profit was majorly due to a one-time tax outgo of ₹226 crore related to deferred tax asset (DTA) reversals after opting for the new tax regime. Excluding this, operational performance was stable.
Impact on RBL Bank Share Price
Following the results:
Share Price Reaction: RBL Bank shares fell by nearly 3% intraday post results announcement.
Current Market Price (CMP): Around ₹253 (as of July 20, 2025)
52-week range: ₹193 – ₹276
The fall reflects investor concerns over lower profitability despite healthy core banking performance.
Reasons Behind Profit Decline
a. One-time Tax Impact
The bank opted for the new tax regime, leading to DTA reversal of ₹226 crore, denting bottomline.
b. Moderation in Retail Growth
Retail loan growth was steady but not aggressive due to conservative underwriting amidst rising unsecured lending risks in the industry.
c. Increase in Operating Expenses
Operating expenses rose 14% YoY, mainly due to technology investments and branch expansion.
Fundamental Analysis of RBL Bank
| Particulars | Q1 FY26 | Q1 FY25 |
|---|---|---|
| Net Interest Margin | 5.3% | 5.4% |
| Advances Growth | +20% YoY | +20% YoY |
| CASA Ratio | 37.4% | 36.9% |
| ROA | 0.6% | 1.2% |
| ROE | 5.3% | 10.5% |
Key Fundamental Insights:
Margins: Stable but slightly declining trend.
Asset Quality: Improving GNPA and NNPA ratios remain a positive.
Profitability: Impacted due to one-off tax adjustments.
Technical Analysis of RBL Bank Share
Trend: The stock is in a sideways consolidation between ₹240-₹270.
Support Levels: ₹240, ₹225
Resistance Levels: ₹265, ₹275
Indicators: RSI near 47 suggests neutral momentum.
Traders may prefer range-bound strategies until a clear breakout.
Expert Views on RBL Bank Share
Motilal Oswal
“RBL Bank’s core performance remains stable, but higher credit costs and one-off tax outgo impacted profits. Maintain Neutral with a target of ₹265.”
ICICI Securities
“Asset quality improvement is positive. However, current valuations factor in growth expectations. Maintain Hold.”
HDFC Securities
“Steady NIMs and improving asset quality are favourable. We recommend Accumulate on dips for long-term investors.”
Should You Buy RBL Bank Shares Now?
Pros:
Improving asset quality metrics
Steady advances growth
Reasonable valuations (Price to Book ~1x)
Cons:
Profit volatility due to tax adjustments
Moderating retail growth
Sector-wide risks in unsecured lending
Verdict: Conservative investors may wait for stable quarterly earnings growth before entering. Aggressive investors can accumulate in phases near ₹240 levels for a long-term horizon.
Risks to Watch Before Investing
Rising NPAs if unsecured retail defaults increase
NIM pressure due to competition and deposit rate hikes
Profitability volatility due to taxation or regulatory changes
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FAQ
Q1. Why did RBL Bank’s net profit decline in Q1 FY26?
Due to a one-time deferred tax asset reversal of ₹226 crore after opting for the new tax regime.
Q2. Is RBL Bank share good for long-term investment?
It has improving fundamentals, but investors should watch for stable earnings growth before making large investments.
Q3. What is the target price for RBL Bank share?
Brokerages suggest a near-term target of ₹265, with long-term upside depending on profit growth.
Q4. What are major risks for RBL Bank?
Sector-wide unsecured lending risks, profitability volatility due to tax/regulatory changes, and competition-driven margin pressure.
Helpful Resources
Conclusion
RBL Bank’s Q1 FY26 results showed a sharp decline in profits mainly due to a one-off tax impact, with operational performance remaining stable. The share price reacted negatively but has found support near ₹250. Investors should weigh the risks of profit volatility against improving fundamentals before investing. As always, consult your financial advisor for decisions aligned with your goals.
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