DCB Bank tanks 5% on muted Q1 results, weaker asset quality

DCB Bank Q1 profit rises 31% YoY to Rs 127 crore, asset quality weakens

Shares of DCB Bank dropped 5 percent in trade on July 31 following muted Q1 results. At 1:30pm, the stock was trading 4.62 percent lower at Rs 122.80 on the NSE.

The private sector lender in a filing with the BSE on July 28 reported a profit of Rs 127 crore for Q1FY24, up 31 percent over the corresponding period last fiscal, as operating profit grew 26 percent year-on-year (YoY) to Rs 209 crore.

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Net interest income increased 26 percent on-year to Rs 471 crore, with advances growing 19 percent and deposits rising 23 percent on year-on-year basis. However, asset quality weakened as gross non-performing assets increased 7 basis points quarter-on-quarter (QoQ) to 3.26 percent and net non-performing asset (NPA) increasing 15 basis points to 1.19 percent during the quarter.

Brokerage firm Prabhudas Lilladher has given a ‘buy’ rating to the DCB Bank stock with a target price of Rs 150 in a report dated July 29, 2023. The report further stated that, “pre-provision operating profit (PPoP) witnessed a miss of 8.5 percent due to lower net interest margins (NIMs) and fees. The asset quality was a drag. Share of granular deposits increasing, recoveries are expected to improve.”

Brokerage firm Axis Securities is also bullish on DCB Bank and has recommended ‘buy’ rating on the stock with a target price of Rs 150 in its research report dated July 05, 2023.

DCB Bank has given a return of 5.56 percent over the last six months. Thus, underperforming the benchmark Nifty Bank index that has given a return of 12.13 percent over the same duration.