DCB Bank Ltd. share price target

DCB Bank's exit quarter Q4FY19 guidance given 3 years back on operational efficiency is largely met. Cost-to-income, ROA and ROE is at 53.7%, 1.1% and 13.7% against its guidance of 55%, 1% and 14% respectively. Earnings for Q4FY19 are 8% ahead of our estimates. Loan growth ex of corporate segment is healthy at 21%. NIMs are steady sequentially at 3.8%. Cost-to-income has eased by 568bps YoY to 53.7%. As a result PAT has grown by 50% YoY. Asset quality continues to be one of the best among peers. We move our valuations to FY21. We retain our BUY rating and increase our TP to Rs250...

DCB Bank reported NII of INR 3.0bn (14% y-o-y & 2% q-o-q) led by loan book growth of (16% y-o-y & 3% q-o-q) to INR 236bn. Margin for the quarter remained stable at 3.78% (-38bps y-o-y & -5bps q-o-q). Higher Other Income (17% y-o-y & 5% q-oq) and moderation in opex (4% y-o-y & 0% q-o-q) resulted in 31% y-o-y & 7% q-o-q growth in PPOP to INR 1.85bn. GNPA / NNPA declined marginally to 1.8% / 0.65% (-8bps / -6bps q-o-q) respectively. We continue to believe that RoA expansion for DCB Bank will depend upon opex moderation going ahead....

Despite macro challenges (Demon and GST), DCBB fulfilled its almost prophetic guidance of 1% RoAA. While loan growth disappointed in 4QFY19 (16%), stable margins, improving op-lev and asset quality impressed. With its core growth engine intact, we believe DCBB has the potential to grow at faster rates. Upgrade earnings by ~12/16% for FY20/21E. A significant improvement in resulting efficiencies (anticipated) drives up our RoAA estimate to ~1.2% by FY21E. 4QFY19 marked the fulfillment of dual commitments by DCBB, viz. (1) Achievement of 1% RoAA in FY19A, (2) A meaningful improvement in operating efficiency (C-I ratio lowest in 20 qtrs). We maintain BUY with a TP of Rs 228 (2x FY21E ABV of Rs 114).

Cost and Capital Efficiencies to Aid RoE; Maintain BUY DCB Bank continued to deliver a consistent performance in 4QFY19 with 21% YoY growth in noncorporate advances, sustained decline in C/I ratio and further improvement capital consumption. CI ratio improved by 300bps YoY to 57% in FY19 (55% in 4QFY19), contributing ~30bps to RoA in FY19. Mortgages and AIB continue to be the key drivers for loan growth in 4Q and FY19. Focus on small-ticket granular loans, efforts towards cost rationalisation, and improved capital consumption should aid expansion in RoE going forward. Margin decline in FY19; to Improve Hereon Margins declined by 33bps YoY to 3.8% in FY19 led by higher cost of funds (+25bps YoY) and...

Improvement in CI ratio to enhance return ratios In a bid to grow aggressively, DCB adopted an aggressive branch expansion drive in Q2FY16. The bank successfully doubled its branch count and further raised it to 333 as of FY19. The banks also invested in various customer facing technology to increase its reach. With bulk of these investments towards increasing scale & scope of reach behind us and moderation in incremental branch expansion, we expect cost-to-income ratio to moderate to 53.6% by FY21E (currently at 56.6%). This reduction in pace of opex is...

DCB bank delivered strong numbers during the quarter with 50% jump in net profit of Rs 96 cr (in-line with our estimate), driven by moderating operating expenses and lower provisioning. PPoP grew by 31% to Rs 185 cr, due to high other income and controlled OPEX. Loan growth of the bank lowered in FY19 due to de-growth in corporate book. Loan book for the year FY19 grew by 16% YoY to Rs 23,568 cr. NII for the quarter grew by 14% YoY to Rs 301 cr (our estimate: Rs 295 cr). OPEX grew by 4% YoY while it was flat on QoQ basis to Rs 215 cr, due to slower branch addition and improving productivity leading to...

Maintain BUY with a TP of 213 (2x Dec-20E ABV of Rs 106). DCBBs strong core operating performance was driven by an uptick in NII (+17% YoY), higher other income (rise in treasury gains and misc. inc) and controlled opex (6/2%). This led to a continued improvement in operating efficiency (core C-I ratio down 250bps to ~56.9%).

DCB Bank's loan growth is healthy at 23% YoY driven by granular segments. NII grew by 17% YoY (2% above expectations) with NIMs flattish on sequential basis. Non-interest income has grown by 26% on the back of doubling of treasury profits and 20% growth in non-treasury income. Cost-to-income has eased by 720bps YoY to 55.2%, excluding treasury it is at 56.9%. PAT has grown by 52% YoY (16% above expectations). Slippages have tad increased, yet asset quality continues to be one of the best among mid cap banks. With improvement in outlook, we have tad increased our TP to Rs220 (Rs210...

ICICI Securities Ltd | Retail Equity Research DCB Bank reported an NII of | 293.6 crore, up 17% YoY, on the back of steady margins at 3.83% and robust credit growth of 23% YoY Other income for the quarter came in higher at | 94.5 crore vs. | 74.9 crore in Q3FY18 led fees from PSL certificate Led by higher other income & healthy NII, operating profit came in at ~| 174 crore, up 19% YoY. This led to a decline in cost-to-income ratio to 55.2%, a sharp fall of ~380 bps QoQ. PAT growth remained...

16 January 2019 driven by higher other income and moderation in opex. PPoP growth of 42% YoY exceeded our estimate of +28%, largely due to a pick-up in other income (26% YoY) on the back of treasury gains of INR112m as core fee income grew by a modest 5% YoY. NIM was flat QoQ at 3.83%. For 9MFY19, PPoP grew 20% YoY, while PAT rose 26% YoY to INR2.3b (v/s INR1.8b in 9MFY18). Opex growth moderated to 5.6% YoY to INR2.1b, aided by slower branch addition and improved productivity. C/I ratio, thus, declined 366bp QoQ to 55%. Provisions came in at INR401m (+17% YoY; in-line). Loan book grew by 23.1%/3.7% YoY/QoQ (v/s +26.