Motilal Oswal's research report on DCB Bank
DCB Bank (DCBB) reported 9.5% YoY/23% QoQ growth in PAT to INR1.6b (18% beat) in 4QFY24, driven by a sharp decline in provisions. NII grew 4% YoY to INR5.1b (up 7% QoQ; 4% beat), aided by 14bp QoQ expansion in margins to 3.62%. Advances grew 19% YoY, supported by healthy growth in mortgages, agri, and gold loans. Deposits rose 19.7% YoY/4.7% QoQ, led by growth in both CASA and term deposits. CASA mix stood at 26% in 4QFY24.
Outlook
DCBB reported a steady quarter, with earnings exceeding our estimates due to lower provisions. Margin improved 14bp QoQ to 3.62%, and management guided NIM to sustain at 3.65-3.75% in the medium term, benefitting from mix change in both deposits and advances. Loan growth was steady due to a healthy growth in mortgages, agri and gold loans, while deposits grew strongly, led by both CASA and term deposits. Fresh slippages moderated, while the restructured book stood under control at 2.6% of loans. We raise our earnings estimates by 3.9%/3.5% for FY25/FY26. We estimate FY26E RoA/RoE at 0.95%/13.5%. Reiterate Neutral with a TP of INR 155 (based on 0.8x FY26E ABV).
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