Broker’s Call: DCB Bank (Buy)
NII increased 17 per cent to ₹699 crore, while NIM declined 10 bps quarter on quarter to 3.25 per cent. Other income grew 34 per cent to ₹249 crore, and PPOP rose 26 per cent to ₹383 crore
DCB Bank reported robust financial performance in Q2FY27, delivering a strong quarter with record profits and improved key metrics. The bank's advances increased by 21% year-on-year to ₹64,127 crore, while deposits grew by 19% to ₹76,839 crore. Non-Interest Income surged by 17% to ₹699 crore, although Non-Interest Margins declined by 10 basis points to 3.25%.
Other income saw a 34% increase to ₹249 crore, and Provision for Cost-to-Income improved to 59.64% - the lowest in 18 quarters. Profit After Tax (PAT) rose by 29% to ₹236 billion, marking the fifth consecutive quarter of record profits. The bank also managed to reduce its non-performing assets to 2.29% and 0.73%, both 23-quarter lows.
Non-Resident TDs increased to 9.1% of total TDs. The bank actively managed high-cost bulk deposits, reducing inter-bank TDs to 19%. CASA ratio declined to 22.3%, while the CD ratio improved to 83.5%. Fresh slippages amounted to ₹437 crore, with recoveries and upgrades covering 97%. Non-gold slippages were 1.55%, while gold slippages rose to 8.04%.
The bank's Price-to-Book (PCR) excluding technical write-offs improved to 68.75%, with ₹218 crore of floating provisions. Return on Capital Employed (CAR) stood at 16.63%. Management retained an 18-20% growth guidance and anticipates NIM improvement in Q3 and Q4. The analyst maintains a Buy rating with a target price of ₹233, valuing the stock at 0.93x FY28E BVPS of ₹250.
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