DCB Bank Ltd. share price target

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.

We maintain our BUY recommendation on reasonable valuations.

Robust business growth with strong advances growth above our estimates

Quarterly Update Q3FY25

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.

We recommend a BUY on the stock with a TP of Rs 132/Share, implying an upside of 11% from the CMP

Quarterly Update Q2FY25

We maintain our BUY recommendation on fair valuations.