DCB Bank Ltd. share price target

Maintain BUY with a TP of Rs 216 (2.2x Mar-20 ABV of Rs 98). After beating our growth forecasts for FY18, DCBB delivered faster than expected growth (+31% YoY) yet again. Curbed costs (up merely 4% QoQ) and significantly lower provisions (64bps vs 80bps QoQ) led to a 20% beat in net earnings. Though the erosion in margins (-26bps QoQ) seems massive, it is mostly optical due to the comparison with reported NIMs (annual) in 4Q. The spike in GNPAs (9% QoQ, a 1Q phenomenon) was lower than previous years.

16 July 2018 DCB Bank (DCBB) reported PPoP growth of 4% YoY 6% below our estimate due to an NII miss of 4% (17bp QoQ contraction in the NIM due to an 8bp decline in yield on advances and a 6bp increase in cost of funds). Other income declined 3% YoY (-2% QoQ) off a high base. with cost to assets of 2.8% being the Provisions of INR332m (-6% YoY) were lower than our estimate, which offset the 6% PPoP miss. Consequently, PAT of INR695m (+7% YoY) came largely in line with our estimate. Strong growth in AIB (+38%), MSME (+43%) and Corporate (+48%) books led to 4.5%/30.6% QoQ/YoY growth in the loan book to INR212.4b. Other smaller categories such as CV (+57%), gold (+31%) and construction finance (+31%) also showed strong growth, while mortgages grew marginally slower at 18% YoY. Slippages inched up to INR1.07b (2.6% v/s 2.1% in 4Q), led by elevated slippages in AIB.

DCB Bank reported PAT of INR 695mn in 1QFY19, a tad below our estimates (4% below JMFe). The miss in PAT was largely driven by continued increase in opex (+17.5% YoY) as the moderation in topline growth (+17% YoY) was in-line with our estimates. DCBB witnessed compression in margin (26 bps QoQ) to 3.9% in 1QFY19, while balance sheet growth was strong (both loans and deposits were up 31% YoY). While competitive forces have resulted in headwinds for DCBB's yields, we remain constructive on DCBB's potential to improve its RoA, primarily driven by an improvement in its cost profile. We believe current levels provide an attractive entry point for the stock. We factor in the compression in NIM and cut our...

We retain BUY on DCB Bank (DCBB) with TP at Rs215. Q1'19 results beat our estimates on both revenue and earnings front. NIM at 3.56% (calc) declined 12bps QoQ and was well on the expected lines. While we foresee some improvement in NIM (especially in H2FY19), the overall trend will remain lower for FY19E (over FY18). Our calculation suggests employee productivity on rise; continued momentum will aid in increased profitability. Loan growth momentum remains intact, asset quality under check, capital position strong; we see RoA /...

DCB Bank Ltd. (DBL), is a small private sector bank with 318 branches across 19 states and 3 union territories. DBL was in consolidation phase during FY08-FY13 with 94 branches and credit book stood at Rs65.8 bn in FY13. Post FY13, DBL changed its strategy for aggressive business growth and consequently its credit book expanded by 3(x) to Rs203.4 bn by FY18, representing CAGR of 25.3% during FY13-FY18. DBL has maintained stable assets quality with GNPA stood at 1.8% and NNPA at 0.72% by...

Maintain BUY with a TP of Rs 216 (2.2x Mar-20 ABV of Rs 98.3). DCBBs 4Q numbers were brimming with positives as growth sustained (+29% YoY) and NIMs held up (4.16%, +4bps QoQ). Tight control on costs was evident as opex grew merely ~2% QoQ and core C-I dropped 330bps QoQ. Robust fee growth (+39%), timely reduction of the mortgage portfolio (down 200bps QoQ) and sharp rise in PCR (75.7%; +240bps QoQ) were a key positives. Asset quality was contained with lower slippages, better recoveries and healthy PCR.

DCB Bank continued to deliver healthy performance on all major metrics in 4QFY18 as well led by (a) strong growth in loan book (+28.6% YoY & 9.4% QoQ); (b) all-time high NIMs of 4.16% in FY18 vs. 4.04% in FY17; (c) strong growth in other income (+33.4% YoY & 13.2% QoQ); (d) continued sequential improvement in C/I ratio to 59.4% vs. 62.3% in 3QFY18; and (e) lower fresh slippages of Rs805mn vs. Rs1,031mn in 3QFY18. Led by 70% YoY and 16% QoQ improvement in upgrades and recovery from gross NPA to Rs667mn, its headline gross and net NPA ratio came in at 1.79% and 0.72%, respectively compared to 1.89% and 0.87% in 3QFY18. The Bank's overall stressed loan portfolio, which improved sequentially, remains within the Management's comfort zone....

Deposits for the bank grew at 24% YoY and 13% sequentially. The CASA portion for the bank stood at Rs 5,840 cr rising by 25% YoY & 7% sequentially. CASA ratio stood at 24.33% vs. 24.31% YoY. Retail term deposits stood at 50.18%. Cost of funds...

Sector: Banking /Mid-Cap | Earnings Update 4QFY18 Background: DCB Bank Limited (formerly Development Credit Bank Limited) has a deposit base of INR 240 bn and advances of INR 203 bn at the end 4QFY18, 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 entails Corporate Banking - 17%, SME -12%, Agriculture 18%, Mortgages ...

DCB Bank reported a healthy set of Q4FY18 numbers with business traction and earnings coming in above our estimates Advances grew at a strong rate of 28.6% YoY (highest in the last six quarters) to | 20337 crore mainly led by the corporate, SME and...