Buy DCB Bank, target price Rs 131: Axis Securities

Axis Securities has buy call on DCB Bank with a target price of Rs 131. The current market price of DCB Bank is Rs 119.05.

DCB Bank, incorporated in the year 1995, is a banking company (having a market cap of Rs 3709.59 Crore).

DCB Bank key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2023.


Financials
For the quarter ended 30-06-2023, the company has reported a Standalone Total Income of Rs 1344.68 Crore, up 3.31 % from last quarter Total Income of Rs 1301.61 Crore and up 29.09 % from last year same quarter Total Income of Rs 1041.69 Crore. The bank has reported net profit after tax of Rs 126.93 Crore in latest quarter.

Investment Rationale
Even as the bank continues to make investments towards the franchise and capacity building, the management remains confident that improving productivity will support cost ratio improvement (C-I Ratio expected to improve to 55% over the medium term). Even as margins compress, the brokerage believes moderating Opex ratios and steady credit costs should enable DCB to deliver RoA/RoE of 0.9-1%/11-13% over FY24-25E.

Promoter/FII Holdings
Promoters held 14.82 per cent stake in the company as of 30-Jun-2023, while FIIs owned 12.3 per cent, DIIs 39.7 per cent.