HDFC Securities is bullish on DCB Bank has recommended buy rating on the stock with a target price of Rs 216 in its research report dated April 17, 2018.
HDFC Securities' research report on DCB Bank
DCBBs 4Q numbers were brimming with positives as growth sustained (+29% YoY) and NIMs held up (4.16%, +4bps QoQ). Tight control on costs was evident as opex grew merely ~2% QoQ and core C-I dropped 330bps QoQ. Robust fee growth (+39%), timely reduction of the mortgage portfolio (down 200bps QoQ) and sharp rise in PCR (75.7%; +240bps QoQ) were a key positives. Asset quality was contained with lower slippages, better recoveries and healthy PCR.
OutlookWith steady NIMs, a tight grip on asset quality and oplev benefits, return ratios are set to improve hereon. Our conservative provisions cost (55bps over FY18-20E) provide further upside risk. Maintain BUY with a TP of Rs 216 (2.2x Mar-20 ABV of Rs 98.3).
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