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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

DCB Bank

BSE ID : 532772     NSE ID : DCBBANK

RECOMMENDED PRICE 81.40

PEAK FROM RECO 244.60 200.49%

CURRENT PRICE 122.40 Resource id #19

DCB Bank is a modern emerging new generation private sector bank with 134 plus branches across 17 states and 2 union territories. We initiate a 'BUY' on the stock with a target price of Rs 120.

DCB Bank Ltd

DCB Bank Ltd has reported results in line with expectations for the quarter ending June 2014. The Net Interest Income grew by 31 percent to Rs.108.37 crores vs. Rs.82.88 cr. in the like quarter previous year. Pre provision profit climbed sharply by approx. 58.25 percent at Rs.81.23 crores as against Rs.51.33 crores in the previous year quarter. The banks adjusted net profit stood at Rs.44.64 crore for the quarter as compared to Rs.42.83 crores in the Q1FY14 and RS.39.07 crores in Q4FY14; registering a growth of approx. 4.23 percent on YOY basis and 14.26 percent on QOQ basis.

The flat growth in adjusted PAT is on account of an additional provision of Rs.10 crores for specific standard assets. Cost Income ratio has witnessed a fall of 680bps at 53.18 percent as against 59.97 percent on YOY and 924bps as against 62.42 percent on QOQ. On the margins front, Net interest margin climbed about 25bps at 3.35 percent as against 3.10 percent in the previous year quarter.  

Going ahead, the bank is focusing on a branch expansion, which is estimated to rise from 134 in Q1FY15 to 185 in FY16. The management has guided at doubling the bank's balance sheet in three years time. The bank's balance growth on a YOY basis is 17 percent. According to management the Savings Account underlining growth has been approximately 19 percent. The banks CASA ratio stood at 25.40 percent in Q1FY15. The bank continues to rely on retail deposits including Term Deposits and about 79 percent of Deposits are in Retail. Advances growth year-on-year was 28 percent and Total Deposits growth was 27 percent.

Valuation

DCB has made a remarkable turnaround in a tough environment by focus on consolidation and steady improvement in most of the parameters. DCB is well-placed in terms of capital adequacy and asset quality, which are major concerns of the banking industry. We believe the bank is trading at an attractive valuation at 10.83x and 9.80x of FY15EPS of Rs.7.39 and FY16EPS of Rs.8.16. We initiate a 'BUY' on the stock with a target price of Rs.120 (appreciation of about 50 percent) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

DCBBank_HemSec_Multibagger.pdf

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