DCB Bank ... earnings update
The other hit of the early result season
was DCB
Bank. The headline of
drop in profit conceals the robust operating performance. NII grew 31 percent
to Rs 220 cr on the back of 25 percent growth in interest earning and 10 basis
points improvement in margins to 4.04 percent.
The decent profit before tax was helped by modest growth in
provision. The reported profit decline was on account of tax benefit in the
year-ago quarter as opposed to full tax in the current quarter.
Asset quality was stable with slippages largely flat at Rs 75
crore. Gross NPA rose 12 percent sequentially. Although relatively smaller
banks are having to navigate in a competitive landscape, DCB is targeting
aggressive growth. The steep run up in the stock has rendered the valuation a
tad expensive – 2.6X trailing book. Investors need to keep this stock on their
radar for a suitable opportunity.
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