2025-11-15 04:38:26
Latest Post
BEL receives orders worth Rs. 871Crore
Rossell Techsys Recognized as Outstanding Supplier by Lockheed Martin
660 MW Unit-1 of SJVN's Buxar Thermal Power Project Successfully achieves Commercial Operation
Adani Cement is the First Indian Cement Company to become a TNFD Adopter
Liberty General Insurance Launches Surety Insurance Business in India
Research
Development Credit Bank - A positive surprise.. - ICICIdirect
Posted On : 2012-04-20 10:45:14( TIMEZONE : IST )
DCB's Q4FY12 profit at Rs.17.3 crore (grew 52% YoY, 11% QoQ) was 9% above our estimates mainly due to lower provisioning expenses (down by 18% YoY) and higher-than-expected loan growth of 24% YoY to Rs.5284 crore. However, NII at Rs.57 crore declined 4% QoQ owing to a 25 bps sequential fall in NIM. Stable yield and a 41 bps rise in cost of funds led to a decline in NIM during the quarter. The bank raised Rs.94 crore through QIP and Rs.98.75 crore through preferential allotment, which resulted into Tier 1 capital rising to 13.8% from 11.2% in Q3FY12. Total CAR stands at 15.4% as on Q4FY12.
We have revised business growth higher to 22% in FY13E from 17% earlier and expect PAT to grow at 29% CAGR over FY12-14E.
Credit growth surprises positively
After plunging sharply from 23.5% YoY growth in FY11 to 8.9% YoY growth in Q3FY12, advances increased by Rs.978 crore to Rs.5284 crore in Q4FY12 recording growth of 24% YoY. Meeting the priority sector target was the major reason for such a sharp rise in loans during Q4FY12. The agricultural loan book rose strongly by 92% QoQ to Rs.801 crore. The corporate book also witnessed healthy 34% QoQ growth to Rs.1194 crore. However, the retail portfolio grew by a moderate 8% QoQ to Rs.1853 crore. We are revising our FY13E credit growth target from 20% to 22%.
Asset quality improves sharply
Asset quality witnessed a sharp improvement with absolute GNPA declining by Rs.14.6 crore sequentially to Rs.242 crore and NNPA declining by Rs.14.1 crore to Rs.30 crore. The NNPA ratio at 0.6% was the lowest in the last few quarters. The provision coverage ratio stands at 91% as against 87% in Q3FY12 and Q4FY11.
Valuation
At the CMP of Rs.50, the stock is trading at 1.3x its FY14E ABV. With an improvement in loan growth and asset quality and margins of ~3.0-3.1%, we expect NII and profit to grow at 22% and 29% CAGR to Rs.342 crore and Rs.93 crore, respectively, over FY12-14E. We maintain our target price of Rs.60 (1.6x FY14E ABV) from a 12-15 months perspective.
