Neutral DCB Bank; target of Rs 130 : Motilal Oswal

Motilal Oswal's research report on DCB Bank

DCB Bank (DCBB) reported 31% YoY growth in PAT at INR1.3b (in line), driven by lower provisions. NII grew 26% YoY to INR4.7b (down 3% QoQ). NIMs moderated 35bp QoQ to 3.8%. Advances grew 19% YoY, supported by healthy disbursements across segments. Deposits grew 23% YoY, led by 5% QoQ growth in term deposits. CASA mix moderated 45bp QoQ to 26%.  Slippages increased to INR3.4b (vs. INR2.7b in 4QFY23), which, along with modest recoveries and upgrades, resulted in deterioration in GNPA/NNPA ratio by 7bp/15bp QoQ.

Outlook

Restructured book declined QoQ but remained elevated at ~INR14.1b (4% of loans). We estimate FY25 RoA/RoE at 1.0%/13.5%. Maintain Neutral with a TP of INR130 (based on 0.8x FY25E ABV).