DCB Bank, a private sector bank, saw a 4.7% increase in its stock price to reach ₹129.80 per share during early trading on Thursday, inching closer to its 52-week high of ₹141.2 per share. This surge was triggered by an announcement in an exchange filing made by the bank on Wednesday.
The filing stated that the Reserve Bank of India (RBI) has granted approval to HDFC Asset Management Company (AMC) Limited to acquire an aggregate holding of up to 9.5% of the paid-up share capital or voting rights of DCB Bank Limited.
"AMC has been advised by the RBI to acquire the 9.5% in the bank within a period of one year from the date of approval. If AMC fails to acquire a major shareholding within the stipulated period, the approval granted by the RBI shall stand cancelled. Further, AMC must ensure that the aggregate holding in the bank does not exceed 9.5% of the paid-up share capital or voting rights of the bank at all times," the bank said in a regulatory filing.
DCB Bank is a new-generation private sector bank with 436 branches across 20 states and two union territories. It is a scheduled commercial bank regulated by the Reserve Bank of India.
The bank’s business segments are retail, micro-SMEs, mid-corporate, microfinance institutions (MFI), agriculture, commodities, government, public sector, Indian banks, cooperative banks, and non-banking finance companies (NBFC).
Over the last six months, DCB bank shares have appreciated from ₹102 to ₹127.80, translating into a gain of 25.30%. In the quarter ending June, the bank reported a profit after tax (PAT) of ₹127 crore.
Comparatively, the profit after tax for Q1FY23 stood at ₹97 crore, reflecting a growth of 31%. Advances grew 19% YoY, and deposit growth YoY was at 23%.
The gross NPA (non-performing assets) for Q1FY24 was 3.26%, while the net NPA was 1.19%. Both of these indicators showed a decline compared to the previous year. The Provision Coverage Ratio (PCR) stood at 77.07%, and the PCR without considering Gold Loans NPAs was at 77.74%.
The bank's capital adequacy remained robust, with a capital adequacy ratio of 17.09% as of June 30, 2023 (with Tier I at 14.78% and Tier II at 2.31% as per Basel III norms).
Following the bank's Q1 performance, domestic brokerage firm Axis Securities retained its 'buy' rating on the stock, setting a target price of ₹150 apiece. ICICI Securities, on the other hand, maintained an 'add' rating on DCB Bank, revising its target price higher to ₹140 apiece from ₹120 earlier.
20 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
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