DCB Bank shares bounce back as lender revises expansion plan

NEW DELHI: Shares of DCB Bank rallied over 7 per cent in Friday's trade after the bank management toned down its aggressive branch expansion plan following harsh market reaction that gave a thumbs down to its earlier plan. The stock rose 7.10 per cent to hit a high of Rs 98.90 on BSE.

The bank, while keeping its expansion plan intact, revised the target by a year. Instead of 12 months as stated earlier, the bank would now consume 24 months to add 150-plus branches in a “cautious, prudent and calibrated manner,” it said in a regulatory filing to BSE.

The stock had slumped 31 per cent over Wednesday and Thursday after the bank said it was looking to add 150 branches by December 2016. The expansion plan was seen as aggressive, stoking fears that the decision would bring down the return ratios sharply in the short term, even more than what the lender had anticipated.

“I did not anticipate such a dramatic reaction. We have had the backing of all our major shareholders and explained our strategy carefully to our main stakeholders. I think everybody is on board with it. So it was an issue that we could not quite understand," said Nasser Munjee, chairman of DCB Bank told ET Now in a telephonic conversation .

“I would have preferred to go the way we had laid out, but given the market sentiment and the sort of reactions we were getting, I felt it prudent that we do not go as fast as we had set out to initially. We will still roll out 150 branches within 24 months," said Munjee

“If people think we are taking too much on board, then that is a sentiment we need to be sensitive about. As experience grows, we will accelerate the pace further down the road,” he said.

Friday’s gains ended a five-day losing streak for the stock. The stock has fallen 34 per cent in the period mentioned. The bank has reported 10.12 per cent YoY fall in September quarter net profit at Rs 36.93 crore . Total income grew 25 per cent to Rs 464.87 crore YoY.