Buy DCB Bank; target of Rs 160: Motilal Oswal

Motilal Oswal's research report on DCB Bank

DCB Bank (DCBB) reported 19.6% YoY growth in PAT to INR1.5b (9% beat) in 3QFY25, led by higher NII and healthy other income. NII grew 14.5% YoY to INR5.4b (in line, up 6.6% QoQ). NIMs expanded 3bp QoQ to 3.3%. Other income grew 49% YoY to INR1.8b (7% beat). Business growth was healthy as advances grew 22.7% YoY/7.5% QoQ to INR477.8b and deposits increased by 20% YoY/3.9% QoQ to INR566.8b. The CASA mix moderated 51bp QoQ to 25.1%. Fresh slippages stood at INR3.95b (vs. INR3.89b in 2QFY25). The GNPA ratio improved 18bp QoQ to 3.11%, while the NNPA ratio inched up 1bp QoQ to 1.18%. PCR declined to 62.9%. We fine-tune our earnings estimates and expect FY26 RoA/RoE at 0.96%/13.4%. Reiterate BUY with a TP of INR160 (based on 0.8x Sep’26E ABV).

Outlook

While the GNPA ratio improved 18bp QoQ. Restructured book was under control at 1.8% of loans. We fine-tune our earnings estimates and expect FY26E RoA/RoE at 0.96%/13.4%. Reiterate BUY with a TP of INR160 (based on 0.8x Sep’26E ABV).