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IDBI Capital Report
DCB Bank Ltd.’s net interest margin declined by 12 basis points QoQ to 3.27% led by decline in yield on assets. Management believes that margins have bottomed out thus will show an upward trajectory going ahead. Asset quality remains stable with gross non-performing asset at 3.29% versus 3.33% QoQ led by higher recoveries.
Banks deposits growth remained strong at 20% YoY; credit growth too witnessed strong growth at 19% YoY. We expect 18% CAGR (FY24-26) credit growth. Net interest income grew by 2.5% QoQ led by decline in margins.
Core fee income grew by 22% QoQ; also management guided for sustainability which will drive return ratios higher. Pre-provision operating profit grew by 24% QoQ led by higher non-interest income. Profit after tax grew by 18% QoQ led by higher provisions (up 61% QoQ).
We largely maintained the estimates for FY25/26E adjusted book value and maintain ‘Buy’ with a new target price of Rs170 (Rs 167) valuing it at 0.9 times price/adjusted book value FY26E.
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Birla Corp Q2 Results Review – Inline; Near-Term Headwinds Hurt Margins; Reiterate ‘Buy’: Motilal Oswal
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