DCB Bank falls over 5% post Q4 results

The stock dipped 7% to Rs 168 after the bank reported 24% YoY drop in net profit in Q4FY17.

DCB Bank  dipped 7% to Rs 168 on BSE in intra-day trade after the bank reported 24% year on year drop in net profit at Rs 53 crore for the fourth quarter ended March 2017 (Q4FY17), on higher provisioning and higher tax expense. The private sector lender had profit of Rs 70 crore in the same quarter last fiscal.

Net interest income (NII), or interest earned minus interest expense, increased 30% to Rs 220 crore from Rs 169 crore last year.

The bank’s gross net performing assets (NPAs) as a percentage of total loans rose to 1.59% at the end of the March quarter from 1.55% in the previous quarter and 1.51% in the year-ago quarter.

Net NPAs rose to 0.79% in the March quarter from 0.74% in the previous quarter and 0.75% in the same quarter last year.

Analysts at Motilal Oswal Securities maintain ‘neutral’ rating on the stock with a target price of Rs 158.

“We expect loan growth (25% CAGR) to be 2x of system loan growth. Strong branch expansion would keep near-term CIR elevated at ~60%. Return ratios are likely to remain muted in the near term, with RoA at ~1% and RoE at 11-13%. Valuations at 2x/16x March 2019 BV/EPS leave limited upside and largely factor in strong growth,” the brokerage firm said in results flash.

The stock of DCB Bank hit a record high of Rs 183 on April 12, 2017, had outperformed the market. Thus far in the calendar year 2017, it soared 67% as compared to 11% rise in the S&P BSE Sensex till Thursday.

At 10:10 am; it was down 5% at Rs 171 on BSE against 0.05% decline in the benchmark index. A combined 2.95 million shares changed hands on the counter on BSE and NSE so far.