Prabhudas Lilladher has given Buy recommendation for DCB Bank with a target price of Rs. 120 in its research report issued on May 08, 2022
Prabhudas Lilladher’s research report on DCB Bank
DCB Bank (DCB) reported a stellar quarter with an all round beat as PAT at Rs1.13bn beat est. by 32%. Healthier PPoP was led by higher loan growth, better NIM and softer opex while stronger recoveries drove lower provisions. Loan growth is improving since the last 4 quarters and DCB is targeting a consistent credit accretion of ~20%. NIM is guided to improve from 3.56% to 3.7% although we have been conservative in our projections due to a larger share of fixed rate loans. Opex might remain elevated as DCB would continue spend on branch and employee addition as well as technology. With recovery run-rate improving, the bank targets to deliver 1% RoA each quarter.
DCB warrants a re-rating from 0.6x as credit growth and recoveries have bounced back. Maintain multiple at 1.0x FY24 ABV with TP at Rs120. Reiterate BUY.