Buy DCB Bank; target of Rs 165: Motilal Oswal

Motilal Oswal's research report on DCB Bank

DCB Bank (DCBB) reported 18.3% YoY growth in PAT at INR1.84b (30% beat) amid better NII and controlled provisions. DCBB’s NII grew 17.1% YoY to INR5.9b (5% beat, up 2.7% QoQ), while NIM improved 3bp QoQ to 3.23% vs. our expectation of 10bp QoQ decline. Business growth was healthy with an advances growth of 19% YoY/3.4% QoQ to INR530b, whereas deposits grew 19% YoY/4.4% QoQ to INR648b. CASA mix stood at 23.5%. Cost to average assets stood healthy at 2.43%. Fresh slippages moderated to INR4b (from INR5.8b in 1QFY26). The GNPA/ NNPA ratios improved 7bp/1bp QoQ to 2.91%/1.21%. PCR declined to 59.2% from 59.7% in 1QFY26.

Outlook

We tweak our earnings estimates for FY27 and project an FY27E RoA/RoE of 1.01%/15.3%. Reiterate BUY with a TP of INR165 (based on 0.8x FY27E ABV).