SPA Securities recommended Buy rating on DCB Bank with a target price of Rs 242 in its research report dated April 22, 2019.
SPA Securities' report on DCB Bank
DCB Bank reported NII of INR 3.0bn (14% y-o-y & 2% q-o-q) led by loan book growth of (16% y-o-y & 3% q-o-q) to INR 236bn. Margin for the quarter remained stable at 3.78% (-38bps y-o-y & -5bps q-o-q). Higher Other Income (17% y-o-y & 5% q-o-q) and moderation in opex (4% y-o-y & 0% q-o-q) resulted in 31% y-o-y & 7% q-o-q growth in PPOP to INR 1.85bn. GNPA / NNPA declined marginally to 1.8% / 0.65% (-8bps / -6bps q-o-q) respectively. We continue to believe that RoA expansion for DCB Bank will depend upon opex moderation going ahead.
Maintain BUY with a target of INR 242, valuing the bank at 1.8x P/BV of FY21E BV of INR 135. Currently, the stock trades at 1.8x / 1.5x FY20E / 21E P/BV respectively.
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