Brokerage Views on DCB Bank's Q4FY21 results

Kotak Equities indicates that recovery is pushed back and indicates a fair value of Rs. 150 (refer to page 268)

"Our thesis remains unchanged for the bank as a good pick among small banks but the recovery in multiple/normalization of business conditions has been delayed due to the second wave of Covid as economic activity has slowed. Maintain BUY with FV at Rs150 (unchanged). Unlike previous cycles in the bank's history and on a relative basis in this cycle, we believe DCB Bank has done well. As the macro stabilizes, we expect growth to accelerate and move towards a higher RoE"

ICICI Securities maintain a 'Buy' rating of Rs. 91 as FY21 RoA at 0.9% summarises its business resiliency

"DCB Bank's (DCB) Q4FY21 financial performance was impacted by few one-offs like A) derecognised interest to the tune of Rs0.4bn towards NPA and provision of Rs0.1bn towards interest on interest payable to eligible customers and B) PSLC[1]related expense of Rs0.16bn. Notably, it remains committed to building a granular retail liability as reflected in strong retail TD growth of 19% YoY in FY21 and top-20 deposit share falling to 6.9% in March'21 from 12% in Mar'19. Collections continued to trend well reaching ~95-96% in mortgage portfolio and non-paying customer pool falling to sub-1% as of March'21; however, resurgence of covid cases may impact collections in near term. Taking cognisance of the second wave, it continued to carry contingency provision of Rs1.24bn as of March'21, over and above Rs1.4bn it created towards restructured assets. Its exit RoA / RoE of 0.8% / 9% in Q4FY21, despite few one-offs and elevated credit cost of 1.6% (annualised), speaks for its business and customer resiliency".

Nirmal Bang indicate an accumulative stance at Rs. 91 as second covid wave a risk to collections and recoveries

"We retain ACCUMULATE rating on the stock with a target price of Rs101 based on 0.8x FY23E ABV. While the current valuation looks undemanding, we think that overall stress levels are expected to remain elevated and keep profitability low. We expect ROE of 8-9% over FY22-23E"

Antique Broking indicate the results to be in-line; recovery could be gradual due to tough environment, recommends 'Buy' at a target price of Rs. 125 with a potential return of 38% (refer to page 20)

"We expect recovery could be gradual and transitory impact could stay and we believe for faster normalization, pick-up in ground level economic activities would be the key. Expect ROAs of 0.7%-0.9% over FY22/23 and maintain Buy with revised Target price of INR125 (~1x FY23 BV, vs. INR145 earlier).

Shares of DCB Bank Limited was last trading in BSE at Rs.92.7 as compared to the previous close of Rs. 90.75. The total number of shares traded during the day was 330719 in over 3275 trades.

The stock hit an intraday high of Rs. 94.65 and intraday low of 91.1. The net turnover during the day was Rs. 30840697.

Source : Equity Bulls

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