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IDBI Capital Report
DCB Bank Ltd.'s net interest margin declined further during Q3 FY24 led by re-pricing of deposits along with decline in yields. However, management maintained NIMs to be in the range of 3.65% - 3.75%. Asset quality deteriorated slightly with gross non-performing assets at 3.43% versus 3.36% QoQ led by higher slippage ratio.
Management remain confident of stable credit cost (45-50 basis points) backed by better recoveries. Banks deposits growth remained strong at 19% YoY; credit growth too witnessed strong growth at 18% YoY. We expect 18% compound annual growth rate (FY23-26) credit growth.
Net interest income declined by 0.4% QoQ led by decline in margins (down 21bps QoQ). Profit after tax remains flat QoQ led by higher provisions (up 3% QoQ).
We have moved to FY26E estimates and expect earning per share to grow at 17% CAGR (FY23-26).
We maintain ‘Buy' with a new target price of Rs 170 (Rs 150) valuing it at one time price/adjusted book value FY26E.
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