Hold DCB Bank; target of Rs 72:ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on DCB BankNII growth remained healthy at 31.6% YoY to | 160 crore, largely inline on account of in-line credit growth. Other income came in at | 47.2 crore, being flat YoY, marginally below our estimate. Opex continued to be a tad higher than previous run rate at | 123.4 crore in Q3FY16. However, the cost-to-income ratio improved YoY and QoQ to 59.4% due to healthy top-line. PAT de-grew 3.1% YoY to | 41.2 crore, broadly in-line with our estimate, owing to higher provision expense at | 21.0 crore (I-direct estimate – | 19.3 crore) & higher tax at | 22.1 crore vs. | 16.4 crore expected (tax rate remaining high for third consecutive quarter). Post couple of quarters of higher GNPA net addition (|18 crore plus), asset quality in Q3FY16, came in steady with GNPA net addition at | 10.6 crore. GNPA came in at | 235 crore, while GNPA ratio flat QoQ on higher credit growth. Credit growth continued to remain above system growth at |11736 crore, up 23.7% YoY. Deposits grew 18.8% YoY. A shift in strategy from steady loan growth and improvement in cost ratios and stable asset quality to aggressive expansion was seen suppressing return ratios in medium term. However, revision of the expansion plans from 12 to 24 months will help reduce the impact on earnings. We have raised our FY17E PAT estimates as we reduce our CI ratio from >70% earlier to 64% now. RoA is expected at 1% from 0.6% estimated earlier by FY17E. We revise rating from SELL to HOLD with a TP of | 72 per share valuing at 1.2x FY17E ABV of | 61.6 per share.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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