DCB Bank soars 10% post Q4 results, brokerage firms see more upside

DCB Bank's management said the company's growth momentum continues to be robust across both advances and deposits; NIM is stabilising and fee income continues to grow consistently.

DCB Bank's share price today: Shares of DCB Bank hit a nine-month high of ₹140, as they rallied 10 per cent on the BSE in Monday’s intra-day trade amid heavy volumes after the assets quality of the private sector lender improved in the March 2025 quarter (Q4FY25).

 

Currently, the stock is trading at its highest level since July 2024; and inching towards its 52-week high level of ₹145.95 touched on June 21, 2024. Thus far in the month of April 2025, it has surged 25 per cent.

 

At 12:30 PM, DCB Bank was quoting 9 per cent higher at ₹138.60, as compared to 1.3 per cent rise in the BSE Sensex. The average trading volumes on the counter jumped multi-fold. As many as a combined 16.24 million equity shares, representing 5 per cent of total equity, of DCB Bank have changed hands on the NSE and BSE. 

 

 

Q4 financial results

 

DCB Bank's asset quality improved during the quarter under review with gross non-performing assets (NPA) standing at 2.99 per cent in the quarter under review as compared to 3.23 per cent in the year-ago period, while net NPA was at 1.12 per cent in Q4FY25 as against 1.11 per cent in the year-ago period.

 

The bank’s year-on-year (YoY) advances growth was at 25 per cent and deposits growth was at 22 per cent YoY. 

 

Profit after tax (PAT) grew 14 per cent YoY at ₹177 crore, against ₹156 crore in the year-ago quarter. Net interest income (interest earned minus interest expense) was up 9.8 per cent YoY at ₹558 crore. Net interest margin (NIM) was stable on a sequential basis at 3.29 per cent in Q4FY25, against 3.30 per cent in Q3FY25. NIM stood at 3.62 per cent in Q4FY24. 

 

DCB Bank’s management said the growth momentum continues to be robust across both advances and deposits. NIM is stabilising and fee income continues to grow consistently. Productivity gains are reflected in the improving cost efficiency. 

 

The management said they are happy to see the consistency in the improvement of portfolio quality despite the challenges posed by the environment. They expect that the measures they have taken will further improve these trends in the times to come.

 

Brokerage view – Elara Capital

 

Analysts at Elara Capital believe consistent delivery is the key trigger to a rerating. The bank trades at 0.6x FY27E P/BV for medium-term RoEs of 12-13 per cent, which renders risk-reward favorable. It has maintained a 'Buy' rating with a target price of ₹155 (unchanged), but consistency will be critical for a rerating.

 

Q4 slippages came in at ₹386 crore (3.2 per cent versus 3.6 per cent QoQ, still a bit elevated). GNPLs in the agri segment and mortgage segment have risen marginally – monitor this trend closely. While gross slippages have been elevated, recoveries have entailed lower credit cost, with DCB Bank sounding confident on sustained recoveries, a trend that may warrant further monitoring, the brokerage firm said in the result update. 

 

Asset quality trends were stable, but warrant a closer watch. The discussion hereon will be focused on: a) NIM trajectory, b) growth trajectory, which may feed into operating leverage benefit, and c) recovery trends and credit cost delivery. While DCB Bank has been wading through challenges, the pressure points on core are still visible, analysts said.

 

While DCB Bank has performed well this cycle, structural operational limitations (long walk on liabilities, investment requirement) may cap returns – RoE of 12-13 per cent in FY27E. Moreover, volatility between the quarters is a challenge and thus, we refrain from ascribing higher structural multiples, and see DCB Bank as more of a tactical play than a structural story at this juncture, the brokerage firm said.

 

Brokerage view – Motilal Oswal Financial Services

 

DCB Bank reported a healthy earnings, driven mainly by healthy other income, in-line NII, and lower-than-expected provisions. Margins stood largely flat in Q4, while improvements in yields were offset by an increase in CoF. Management expects NIM to be manageable with a 50bp repo rate cut, while any further cut could result in a downwards bias for NIMs. 

 

Loan growth was steady, and the brokerage firm expects loan growth to remain healthy over the next few years, driven by expansion in the secured retail assets, while deposit growth too shall be following a healthy trend. Fresh slippages have been on a decline, resulting in continuous improvement in asset quality. The restructured book too follows a declining trend over the past few quarters. The brokerage firm reiterates 'Buy' with a target price of ₹165 (based on 0.8x FY27E ABV).

 

About DCB Bank

 

DCB Bank is a new generation private sector bank with 464 branches across 20 states and 2 union territories. It is a scheduled commercial bank regulated by the Reserve Bank of India. The Bank’s business segments are Retail, Micro-SMEs, SMEs, Mid-Corporate, Microfinance Institutions (MFI), Agriculture, Commodities, Government, Public Sector, Indian Banks, Cooperative Banks and Non Banking Finance Companies (NBFC).