Arihant Capital has given Recommended hold recommendation for DCB Bank with a target price of Rs. 91 in its research report issued on Feb 10, 2022

Arihant Capital’s research report on DCB Bank

DCB Bank has reported in line operating performance during Q3FY22 with PAT of INR 75 cr as against our estimate of INR 77 cr, driven by QoQ improvement in NIMs. Margins improved by 24bps on sequential basis supported by 12bps QoQ decline in cost of funds. NII for the quarter grew by 3% YoY/7% QoQ to INR 345 cr was higher than our estimate of INR 332 cr, driven by healthy credit growth. Bank has reported another quarter of healthy advance growth of 9% YoY (8% YoY in Q2FY22). Operating profit for the quarter declined by 28% YoY and increased by 14% QoQ to INR 199 cr as compared to our estimate of INR 203 cr. Slippages for the quarter remained elevated due to gold loan business was impacted by high infections from third COVID wave, as collections/repayments slowed.

Outlook

Most of gold delinquencies is expected to be recovered over the next 2-3 quarters. Healthy recoveries and increasing credit growth will support the valuation improvement. We revise our rating on the stock to Hold from Neutral with a revised target price of INR 91 (vs. INR 95 earlier), based on 0.7x FY24E ABV.

More Info on Trent

At 10:35 hrs DCB Bank was quoting at Rs 80.80, up Rs 0.30, or 0.37 percent.

It has touched an intraday high of Rs 81.45 and an intraday low of Rs 80.10.

It was trading with volumes of 18,238 shares, compared to its thirty day average of 83,674 shares, a decrease of -78.20 percent.

In the previous trading session, the share closed down 4.85 percent or Rs 4.10 at Rs 80.50.

The share touched its 52-week high Rs 120.75 and 52-week low Rs 78.30 on 18 February, 2021 and 31 December, 2021, respectively.

Currently, it is trading 33.08 percent below its 52-week high and 3.19 percent above its 52-week low.

Market capitalisation stands at Rs 2,510.21 crore.

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