DCB Bank Ltd. share price target

Delivering Stable Performance Across Cycles

We value the stock at 0.95x FY27E ABV to arrive at a target price of Rs 200/share, implying an upside of 14% from the CMP.

DCB Bank (DCB) hosted its maiden analyst day. The bank intends to remain focused on the underserved MSME segment through secured and granular loan offerings.

DCB Bank (DCBB) has been delivering healthy loan growth and has guided for a steady growth rate of 18-20% over the coming years. The bank continues to focus on granular retail loans with a retail mix (ex-Agri) at 65% of the total portfolio.

We maintain our BUY recommendation on reasonable valuations.

DCB Bank's NIM declined by 9bps QoQ to 3.2% led by decline in yield on assets. Management targets improvement in NIMs to 3.2% with 20% liability book growth planned. Asset quality remain stable with GNPA at 2.98% vs 2.99% QoQ led by higher write offs. However, slippage ratio inched up led by stress in MFI and unsecured portfolio. Banks deposits growth remained strong at 20% YoY; credit growth too witnessed strong growth at 21% YoY. We expect 18% CAGR (FY25-27E) credit growth. NII grew by 17% YoY led by decline in margins. Core fee income grew by 18% Yoy; while one time gain during the quarter supported higher other income....

DCB Bank (DCBB) reported an 11% QoQ decline in PAT to INR1.57b (20% YoY growth, 10% miss) due to higher provisions in 1QFY26. NII grew 16.9% YoY/4% QoQ to INR5.8b (in line), while NIM contracted 9bp QoQ to 3.2%.

We met Mr Praveen Kutty, MD&CEO of DCB Bank (DCB). Management is re-orienting DCB towards being customer-centric, as opposed to being product-centric earlier.

Quarterly Update Q4FY25

We maintain our BUY recommendation on reasonable valuations.

Business growth remains strong with a rising focus towards high-yielding advances

DCB Bank (DCBB) reported 13.8% YoY growth in PAT to INR1.8b (12% beat), driven by better other income and lower-than-expected provisions. NII grew 9.9% YoY/2.8% QoQ to INR5.6b (largely in line). NIMs inched down 1bp to 3.29%.

DCB Bank (DCBB) has experienced a healthy recovery in loan growth over the past two years after reporting tepid trends over FY20-22. The bank continues to focus on granular retail loans with a retail mix (ex-Agri) at 65% of the overall portfolio.

Quarterly Update Q3FY25

Robust business growth with strong advances growth above our estimates

We maintain our BUY recommendation on reasonable valuations.

DCB Bank (DCBB) reported 19.6% YoY growth in PAT to INR1.5b (9% beat) in 3QFY25, led by higher NII and healthy other income. NII grew 14.5% YoY to INR5.4b (in line, up 6.6% QoQ).

Strong traction in fee income, stable margins and lower opex led to sharp improvement in DCB Bank’s Q3 operating profits. Headline asset quality was stable.