Neutral DCB Bank ; target of Rs 90: Motilal Oswal

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Motilal Oswal 's research report on DCB Bank

DCB Bank's (DCBB) 1QFY21 operating profits were in line while lower provisions supported earnings. Business growth moderated and is expected to remain weak. Margins are under pressure (declined 22bp sequentially). While the moratorium book plunged to ~26% (v/s 60% earlier), we remain watchful of the outlook ahead. We have cut our estimate by ~4% each for FY21/FY22E, factoring in the moderation in business growth/fee income. However, it was slightly offset by lower opex. Maintain Neutral.

Outlook

We have cut our PAT estimates by 4% each to factor in further moderation in business growth/fee income trends, which was slightly offset by lower opex. We estimate DCBB to deliver FY22E RoA/RoE at 0.8%/9.0%. Maintain Neutral with revised TP of INR90 (0.8x FY22E ABV).

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