Motilal Oswal's research report on DCB Bank
DCB Bank (DCBB) reported a healthy quarter characterized by strong operating performance (10% PPoP beat) and steady business growth. NIMs improved 16bp QoQ to 4.18% while fee income rose 30% QoQ in 4QFY23. Slippages moderated significantly to INR2.7b (v/s INR4.0b in 3QFY23), which coupled with healthy recoveries and upgrades resulted in an improvement in GNPA/NNPA ratio by 43bp/33bp QoQ. Restructured book declined QoQ but remains elevated at ~INR15.5b (4.5% of loans). Collection efficiency (CE) improved across segments and broadly reached the pre-Covid levels.
Outlook
We raise our FY24/25 earnings estimates by 6%/7% factoring in higher NII and project an FY25E RoA/RoE of 1.0%/13.4%. Reiterate Neutral with a revised TP of INR120 (based on 0.8x Sep’24E ABV).
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