The 30 reports from 13 analysts offering long term price targets
for DCB Bank Ltd. have an average target of 107.89. The consensus estimate
represents an upside of 0.22%
from the last price of 107.65.
Background: DCB Bank Limited (formerly Development Credit Bank Limited) has a deposit base of 294bn and advances of 250bn at the end of 1QFY21, making it the smallest bank in the listed private sector space, including both new and old generation private sector banks. Promoter group the Aga Khan Fund for Economic Development (AKFED) & Platinum Jubilee Investments holds ~15% stake. DCB services entail Corporate Banking - 12%, SME -11%, Agriculture 21%, Mortgages...
We maintain ADD with a target price of Rs 123 The better-than-expected operating performance led to an earnings beat, despite higher-than-expected provisions. Even as overall deposits de-grew, the bank's focus on improving deposit granularity was evidenta positive. In the near term, growth is likely to be muted, and the bank is likely to focus on relatively less risky segments. We continue to build elevated GNPAs and provisions, despite the significant improvement in collection efficiency. Our estimates remain mostly unchanged. Attractive valuations and the bank's conservative approach to lending drive our positive stance.
Growth to remain muted, provisions to be elevated DCB Bank's (DBL) 2QFY21 financial performance was better than our estimates. NII was up 7% YoY and 9% QoQ, driven by improved yields and lower cost of funds despite flattish advances growth. Advances growth is expected to be in the negative in FY21. Fee income remained subdued due to lower activity and market conditions and is expected to recover to pre-covid levels only by Mar'21. Employee expenses, down 8% YoY and 3% QoQ in 2QFY21, are expected to pick up going forward as the employee count expands. The bank is looking to hire people for mortgages. Long term opex to average assets guidance has been retained at ~220bps. Provisions remained elevated (up 1.6x YoY...
DCB Bank (DCBB) reported strong operating profits, aided by margin expansion and controlled opex. However, business growth moderated in both loans and deposits. The management has further guided for loan...
DCB Bank's 2QFY21 earnings demonstrated sequentially higher provisioning expenses (1,131mn v/s 837mn in 1QFY21) and net profit of 823mn; up by 3.7% sequentially. The headline PCR increased sequentially to 79.1% as fresh slippages remain insignificant. The bank's total slippages number remains minuscule (90mn v/s 52mn in 1QFY21), higher write-offs (284mn v/s 66mn in 1QFY21) and muted advance growth have resulted in GNPA ratio (2.27% v/s 2.24% in the previous quarter) and decline in NNPA ratio (0.83% v/s 0.99%). On the business front, the bank reported muted growth in net advances (de-growth of 0.7% QoQ) and lackluster deposit traction of -2.2% QoQ. Gold loans grew at a healthy pace of 42% sequentially. The collection efficiencies of the bank...
DCB Bank reported weak Q2FY21 results with controlled opex being the only silver lining. Muted business growth and elevated provisioning were the laggards, which impacted overall PAT. Provision surged 161.4% to | 113.1 crore (~45 bps of advances), including Covid related provisioning of | 48 crore. Total Covid provisioning as of September 2020 was at | 143 crore (~57 bps of advances). In addition, the bank has additional floating provisions of | 103 crore. This translates into total contingent provisioning of ~160 bps as on Q2FY21. Slippages were...
DCB has seen a sharp price correction on the fear of a major part of its portfolio having exposure to the troubled MSMEs (~37% of portfolio) and CVs (~7% of portfolio). Although we believe, that the bank will face pain in the near term with a significant drop in disbursements and loan growth, stress on the asset quality and higher credit costs; we also bear in mind that the bank's relatively strong underwriting and conservative approach towards lending will enable it to sail through these tough times. We have valued DCB at 0.8x P/Adj. BV on FY22E Adj. Book Value and arrived at a target of Rs. 98, implying an upside of 22% from CMP.
Provision surged 106% YoY to | 84 crore, including Covid related provisioning of | 32 crore. Total Covid provisioning as on June 2020 was at | 95 crore i.e 40 bps of advances. In addition, the bank has additional floating provisions of | 99 crore i.e ~0.4% of advances. PCR was at ~75.2% against 70.8% in Q4FY20. Slippages were lower at | 5.2 crore, on the back of standstill asset classification. GNPA and NNPA ratio declined 2 bps and 17 bps QoQ to 2.44% and 0.99%, respectively. Advances growth saw continued deceleration to 4.2% YoY to | 25058 crore...
Focus on capital optimization amid serious challenges ahead DCB Bank (DBL) reported 2.1% YoY decline in 1QFY21 PAT due to higher provisions (up 106% YoY) as the bank provided Rs320mn towards covid-related contingencies and Rs350mn towards NPA provisions. Though collection trends have been improving each successive month, management outlook suggests that an increase in NPAs is inevitable. Accordingly, we retain our NPA estimates and increase our credit cost assumptions for FY21. Given the loan book construct, i.e. collective exposure to CV/mortgage/SME/MSME at 60%, the slippage risks are relatively higher once the moratorium is over. Also note that the banks conversations with...
However, we remain optimistic about the bank's long-term prospects, and this underpins our ADD recommendation (target price of Rs 103, 0.9xFY22E ABV). DCBBs 1QFY21 print was in line. The QoQ de-growth in deposits was underwhelming, but DCBBs focus on improving deposit granularity was evident and is positive. Asset quality was optically stable (benefited by the standstill classification), and the moratorium book dipped significantly. Our estimates remain mostly unchanged, and we expect earnings to remain under pressure in the near term as provisions are set to rise.
DCB reported advance degrowth of 0.37% for Q4FY20 on a QOQ basis while deposits registered a QOQ growth of 2.14%, even though Q4 usually has historically been the strongest quarter for the bank. NIMS for the quarter stood at 3.64% against 3.71% in Q3FY20. GNPA's stood at 2.46% against 2.20% in Q3FY20 while NNPA stood at 1.16% against 1.03% in Q3FY20. The provision coverage ratio was at 70.81% against 76.99% in Q3FY20. Advances growth to pick up pace from Q3FY21 as COVID induced pain eases and the economy returns to normalcy. GNPA's increase - upgrades delayed On a QOQ basis GNPA'S registered an increase of INR 795 mn as upgrades were affected by the lockdown. Within GNPA's the highest...
Loan growth slows to single digits; Asset quality remains under pressure DCB reported a lackluster quarter with increased stress on asset quality, tepid loan growth and elevated provisions due to Covid-19. The only solace was the continued control over opex. oAdvances growth stood at 8% YoY (a multi-year low) & remained flat QoQ with advances at Rs. 25,345 Cr. Loan growth trended down owing to a slowdown in all segments viz. Mortgage, SME, CV, Agri and Corporate. Loan book ex-corporate grew by ~10% YoY. We expect advances to grow at 10% CAGR during FY20-22E. oNIMs declined QoQ by 7 bps to 3.64%. (YoY NIM was at 3.78%). NII grew by 8% YoY. LCR has been in excess of 130% which has impacted NIMs by 4-5 bps. NIMs are expected to be negatively impacted in FY21E as the bank will look to maintain excess liquidity and also due to higher slippages. oOther income increased by 11% YoY. Fee income grew by a mere 2% while treasury income and forex transactions led to the overall increase in other income. oOpex grew 3% YoY and cost/income declined 330 bps QoQ and 260 bps YoY to 51.1%. DCB is confident of maintaining its opex levels low in the current year. oTotal Income grew by 8%. oProvisions stood at Rs. 118 Cr vs QoQ Rs. 59 Cr and YoY Rs. 35 Cr. Out of this, Rs. 63 Cr (0.95% of AUM) provisions were towards Covid (including Rs. 9 Cr as 10% provisions on overdue accounts as on 1st March as prescribed...
DCB Bank reported an operationally steady quarter but with higher provision at | 63 crore related to Covid impacted earnings. Provision surged 240% YoY to | 118 crore, including Covid related provisioning of | 63 crore vs. RBI requirement of | 9 crore. The bank has maintained additional floating...
Expect de-growth in 1HFY21, NPA challenges inevitable DCB Bank (DBL) reported NII 2% below our estimate. Operating profit growth was relatively better at 14.5% YoY/11.7% QoQ on the back of a flexible cost structure (as indicated by the management). Total opex grew by 3.1% YoY and declined by 2.1% QoQ. Provisions for the quarter stood at Rs1,182mn, up 2.4x YoY/1x QoQ as the bank provided a sum of Rs630mn related to covid-19. Going forward, we expect credit cost to increase on account of NPA build up. PAT came in 32% lower than our estimate mainly on account of higher-than-expected provisioning. Advances growth at 7.5% YoY was weak as Rs4-5bn worth of loans could not be...
