DCB Bank looks interesting: Vinay Khattar

Vinay Khattar, Associate Director & Head of Research at Edelweiss Financial Services told CNBC-TV18, "Our sense is that the worst has been over for DCB Bank for a while now. So, there was a management change which happened in 2009 and post that the company has been making lot of efforts and in last couple of years they seem to have got their act together.""They were one of the worst banks in terms of cost to income ratio, cost was very high. That has been brought down significantly over the last two or three years and our sense is maybe for next couple of years that number will continue to improve. There were large non-performing assets (NPA), bank has come down heavily in terms of giving bad loans. So, their credit growth has been more muted just about mid teens is the kind of credit growth that the company has been doing for the last one or two years and our sense is that this is the right focus that not grow credit very aggressively specially when you find that the overall macroeconomic scenario is bad," he said."The company is sitting on a healthy amount of capital. So, capital adequacy ratio is comfortable at about 15 percent. So, overall almost 17-18 percent of Return on Equity (RoE) company over next two years and it is available to us at just less than two time price to book. Compare this with IndusInd Bank, the numbers are superior but the price is significantly higher at about 2.8 - 2.9 times one year forward. So, as compared to the other banks in this segment this is priced significantly less. The numbers are improving dramatically and with the new management in place our sense is that overall the bank will have a good time over the next two-three yeras. So, it could be an interesting stock from investment perspective with a one or two years view," he said.