DCB Bank hits record high on fund raising plans

Thus far in 2017, the stock has outperformed the market by surging 52% against 9% rise in Sensex.

DCB Bank hit a record high of Rs 164, up 4% on BSE, extending its Thursday’s 2% gain, after the private sector lender said its board approved fund raising plan by up to Rs 400 crore through qualified institutional placement (QIP).

“In the meeting held on Tuesday, March 07, 2017, has approved raising of capital by way of issue of equity shares to qualified institutional buyers to the extent of Rs 400 crore inclusive of share premium,” DCB Bank said in a regulatory filing.

Thus far in 2017, the stock has outperformed the market by surging 52% against 9% rise in the S&P BSE Sensex. Since January 13, post October-December (Q3FY17) results, it rallied 38% against 6% gain in the benchmark index.

DCB Bank had reported a healthy 25% year on year (YoY) growth in net profit at Rs 51 crore in Q3FY17, on back of 31% YoY jump in net interest income of Rs 209 crore over the previous year quarter.

Assets quality of the bank also improved with the gross non-performing assets (NPAs) of the decreased to 1.55% of total advances, from 1.75% at the end of second quarter of FY17. Net NPAs declined to 0.74% from 0.84%.

“While the government’s demonetisation drive impacted DCB Bank’s loan growth, we draw comfort in its CASA accretion (+400bps QoQ). The bank’s branch expansion strategy continues to remain well on track with limited impact on overall costs. Drawing parallels from past experience, we expect the outcome of the strategy to be profit accretive over FY18-19E,” analysts at Centrum Broking.

“We continue to like DCB Bank for the consistency in earnings, focused approach towards growth, asset quality and capital position. Expansion strategy is well on track, with limited impact on costs. We expect operating leverage to benefit over FY18-19E,” said brokerage firm in recent report.

At 10:25 am; the stock was up 2% at Rs 161 as compared to 0.27% rise in Sensex. A combined 3.78 million shares changed hands on the counter on BSE and NSE so far.