DCB Bank Ltd. share price target

We maintain our BUY recommendation on the stock.

DCB Bank (DCB) has reported a strong quarter with Q4FY23 PAT at Rs1.42bn (up ~25% QoQ) driven by healthy business growth, NIMs uptick QoQ, improvement in cost to income and negative net slippages. RoA annualised inched up further to 1.1% (vs 0.94% QoQ).

Recommendation: We recommend a BUY rating on the stock with a TP of Rs 116, implying an upside of 10% from CMP.

The stock currently trades at attractive valuations of 0.7x Sep'24E ABV and we value the stock at 1x Sep'24E ABV to arrive at a target price of Rs 150/share, implying an upside of 32% from CMP. We re-iterate a BUY recommendation on the stock.

DCB Bank’s (DCB) Q3FY23 financial performance is characterised by steady improvement in core operating performance and continued moderation in fresh slippages. Strong credit growth at 21% YoY and 41bps YoY.

DCB Bank’s (DCB) Q2FY23 financial performance has been characterised by improvement in core operating performance as reflected in its strong 10% QoQ NII growth, 19% QoQ growth in core fee income, steady decline in NPL ratio and improved visibility in credit growth acceleration in coming quarters.

DCB Bank’s (DCB) credit growth trajectory was impacted sharply during the past three years due to corporate book consolidation in FY19 and pandemic between FY20-FY22.