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Updated: Jul 18, 2018, 04.41 PM IST
PEER COMPANIES
Edelweiss has a hold call on DCB Bank Ltd. with a target price of Rs 207. The current market price of DCB Bank Ltd. is Rs 162.2 Time period given by the brokerage is a year when DCB Bank Ltd. price can reach defined target. DCB Bank Ltd., incorporated in 1995, has a market cap of Rs 5019.88 crore.
Investment rationale by Edelweiss
DCB Banks (DCB) Q1FY19 PAT of INR695mn (up 7% YoY) is broadly in line with our estimates. Key highlights: a) loan growth rose >30% YoY, but lower NIMs (down 19bps QoQ) kept NII growth below trend at ~17% (25– 30% run-rate over previous quarters); b) Asset quality was steady with slippages at 2.1% leading to GNPLs of 1.86% (1.79% in FY18); and c) persistently high cost-income ratio (~60%, albeit improving). As DCB is nearing its branch expansion exercise, we anticipate operating leverage benefits would start flowing in. That said, despite factoring in an improving revenue momentum, we expect RoE to be sub-par (12–13% even by FY20) on high cost ratios, implying limited upside from current level. Maintain HOLD.
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