DCB Bank Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Mid-sized private sector bank stocks saw a run up in the recent past in anticipation of a better performance in terms of growth and asset quality. The stock price of DCB Bank has seen highest run up among banking peers to the tune of ~84% YTD from January 1, 2017 till date. Healthy growth in advances at ~22% YoY and broadly steady asset quality (GNPA at ~1.6%) may have led to the stock price surge. With recent capital raising of ~| 397 crore, DCB is well placed on capital adequacy front (that...

DCBBs Annual Report for FY17 vindicates our stance of continued growth momentum (led by widening of its network, increased product offerings) and stable asset quality trends, given lower exposure to stressed sectors and improving granularity. Despite our conservative assumption on margins, oplev and slippages, DCCB is set to cross 1% RoAA by FY19E. Maintain BUY with a TP of 221 (2.5xFY19E ABV)

Background: DCB Bank Limited (formerly Development Credit Bank Limited) is the smallest listed private sector lender. DCB has a deposit base of INR 193bn and advances of INR158bn at the end 4QFY17, 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 ~16.19% stake. DCB services entails Corporate Banking - 16%, SME -12%, Agriculture 18%, Mortgages 43%. As on 4QFY17, the bank has a...

Our FY18/19E numbers assume better NIMs, controlled opex and a fund raise (Rs 4bn QIP at Rs 170/sh). With healthy business momentum and asset quality under control, DCBs recent run-up is sustainable. We remain BUYers of DCBs multi-year growth story with a revised TP of Rs 197 (2.25x Mar-19E ABV of Rs 87.6)

DCB Bank reported healthy core operational performance in Q4FY17 Advance growth continued to remain strong at 22.4% YoY to ~| 15818 crore while deposit growth was robust at 29.2% YoY to | 19289 crore led by 36% YoY traction in savings account balances Slippages came in lower at | 75 crore compared to | 79 crore seen in Q3FY17. However, due to lower recovery of | 22.5 crore (| 64 crore in Q3FY17), the GNPA increased QoQ to | 254 crore from | 227.9 crore. The GNPA ratio increased 4 bps QoQ at 1.59%...

The Management focuses on increasing loan book in low-ticket retail, SME & AIB segments and augmenting its footprint both on physical and digital front. Though this aggressive strategy of expanding footprints will marginally impact its return ratios in the near-term, it would bring forth substantial positive benefits in the long-term. Further, Management focuses on increasing efficiency of existing network to improve cost to income ratio in the long-term, which will lead to sustained earnings growth. We expect healthy traction in earnings on the back of robust loan growth, moderate credit cost and stable margins. Rolling over our valuation to FY19E, we reiterate our BUY recommendation on the stock with a revised Target Price of Rs207...

ICICI Securities Ltd | Retail Equity Research DCB Bank's stock price has increased ~42% (surpassing those of peers) in the last two months. Such a sharp run up in the stock can be attributed to strong growth in advances (24% YoY) coupled with improvement in asset quality (GNPA at 1.55%) despite demonetisation. In addition, the management is targeting capital raising to the tune of ~| 400 crore (board approval on March 7, 2017), which will be book value accretive. However, we have not factored in the effect of increased capital in our estimates....

DCBB sprung a pleasant surprise with a healthy performance across parameters. Led by (1) Strong growth ( 24% YoY), (2) Superior NIM of 3.95% and (3) A stable core C-I ratio of ~63%, DCBB?s core ( 31% YoY) and net ( 25% YoY) earnings beat estimates. CASA ratio stood at 26%, up ~400bps QoQ (though not sustainable, we believe) with a sharp 58% rise in SA.

Background:DCB Bank Limited (formerly Development Credit Bank Limited) is the smallest listed private sector lender. DCB has a deposit base of INR 188bn and advances of INR146bn at the end 3QFY17, 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 ~16.21% stake. DCB services entails Corporate Banking - 16%, SME -11%, Agriculture 17%, Mortgages 44%. As on 3QFY17, the bank has a...

ICICI Securities Ltd | Retail Equity Research Amid demonetisation, advance growth continued to remain above system at ~| 14584 crore, up 24% YoY, higher than our estimate DCB Bank reported bottomline at | 51 crore (| 48.5 crore in Q2FY17), above our estimate of | 46.5 crore, led by higher PPP. NII growth remained healthy at 31% YoY to | 209.5 crore, led by higher credit growth. Led by treasury gains, other income growth also remained healthy at 36% YoY to | 64.1 crore. Higher PPP was partly offset by...