dcb bank 4qfy15
DESCRIPTION
Dcb Bank 4qfy15TRANSCRIPT
52 Week High/Low INR 127/60
Bloomberg / Reuters DEVB IN / DCBA.BO
Equity (shares in mn) 282.0
Mkt. Cap in bn INR 33.9/ $ 0.6
Avg. Daily Vol. (‘000) 1544.9
Avg. Daily Vol. (mn) INR 186.9/$ 3.0
Shareholding Mar 14 Dec 14 Mar 15
Promoters (%) 18.46 16.41 16.38
FII (%) 12.31 15.49 14.65
DII (%) 16.59 24.30 23.52
Others (%) 52.64 43.80 45.45
Pledge (% of
promoter holding) 0.00 0.00 0.00
Valuation Summary (INR bn)
Y/E March 2015A 2016E 2017E
Net Interest Inc 5.08 6.05 7.56
Other Inc 1.65 1.97 2.40
Pre Prov Profit 2.08 3.28 4.60
PAT 1.91 2.03 2.69
EPS 7.21 7.29 9.56
EPS growth (%) 19.2 1.1 31.2
PE 16.6 16.5 12.6
P /BV 2.1 1.9 1.7
Div Yield (%) 0.0 0.1 0.2
ROA (%) 1.3 1.1 1.2
ROE (%) 13.9 12.4 14.1
Tier – 1 (%) 14.2 13.1 12.1
CAR (%) 14.9 13.7 12.7
Performance % 1M 3M 12M
DCB Bank 11.2 43.1 82.4
Sensex 0.5 9.3 28.1
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DCB Bank Relative Sensex (RHS)
Above par performance; reiterate Outperformer
DCB’s advances grew (28.7%YoY, 10.3%QoQ) to INR 104.6bn in the 4QFY15; driven by
higher growth in Agri credit (37.7%YoY) Mortgages (45.5%YoY, 10.3%QoQ) and Corporate
banking (13.7%YoY, 5.7%QoQ). However, SME segment witnessed contraction (4.5%YoY,
2.4%QoQ). Subsequently, its share declined 300bps YoY to 13%.
Deposits grew a healthy (22.1%YoY, 6.4%QoQ) to INR 126bn supported by healthy growth
in retail term deposits (32.2%YoY, 4.8%QoQ) and NRI deposits at 36.1%YoY.
CASA ratio decreased 160bps YoY to 23.4% amid soft growth (14.3%YoY, 4.7%QoQ). This
trend is likely to continue in the near term and CASA ratio should moderate to 20%-22%.
However, with DCB adding new branches SA should grow by 25% over the medium term as
and when the new branches mature. Further, DCB plans to open 25-30 branches every
year.
NIM declined marginally (5bps QoQ) to 3.8% in 4QFY15 supported by the benefit of capital
raised in the 2QFY15. Further, yield on funds increased (11bps QoQ). However. Cost of
funds increased (10bps YoY) to 7.78% led by moderation in CASA share of deposits and
increased focus on retail term deposits. Management indicated NIMs are likely to moderate
in the medium term given weakness in MSME segment.
GNPAs at 1.76% rose 3.8%QoQ in absolute terms led by higher slippages (3.5%
annualized). Slippages were mainly led by one large a/c of INR 650mn in the corporate
segment. GNPAs in the SME segment declined 69%YoY as the bank sold SME NPAs worth
INR 443mn to ARC. CV segment witnessed pressure with GNPAs increasing 15.8%QoQ.
However, asset quality in mortgage and personal loan segment continued to remain resilient.
NNPA at 1.0% increased 11.03%QoQ in absolute terms led by stable asset quality.
Operating profit increased 35.5%YoY to INR 0.68bn, supported by strong core performance
(29.7%YoY, 6.4%QoQ). Further non-interest income also grew a healthy 38.2%YoY amidst
higher growth in fee income (20%YoY) and higher recovery (2.5xYoY). Cost/Income
increased decreased 160bpsYoY to 61.4% on the back of slower growth in operating
expenses and higher branch productivity. Consequently, net profit increased (61.1%YoY,
48.2%QoQ) at INR 630mn.
Valuation: The stock trades at 1.7X FY17E P/BV and 12.6X FY17E PE. Healthy business growth,
stable NIM, improving asset quality and steady earnings growth should complement return ratios. We
maintain the target price at INR 142/share, implying a FY17E P/BV of 2.0X. We rate the stock an
OUTPERFORMER.
Risks: Weakness on the asset quality from the SME and Corporate segment.
Results Summary 4QFY15
Y/E March ( INR mn) 4QFY15 4QFY14 YoY growth 3QFY15 QoQ growth
Net Interest Income 1297 1000 29.7% 1219 6.4%
Other Income 463 335 38.2% 480 -3.5%
Pre Provisioning Profit 680 502 35.5% 684 -0.6%
PAT 630 391 61.1% 425 48.2%
Cost / Income (%) 61.4 62.4 59.8
Tax Incidence (%) (17.2) NA 15.0 Gross NPA (%) 1.8 1.7 1.9
Net NPA (%) 1.00 0.9 1.00 Prov Coverage ratio (%) 74.7 80.5 77.07
CAR (%) 14.9 13.7 14.4
Sensex Nifty 28,780 8,697
Price: INR 121
DCB Bank Sector: Banks/Mid Cap Earnings Update – 4QFY15
April 16, 2015
Target Price: INR 142 OUTPERFORMER
Background: DCB Bank Limited (formerly Development Credit Bank Limited) is the smallest listed private sector lender with a total asset base of INR
161.3 as of 4QFY15. DCB has a deposit base of INR 126bn and advances of INR 104.6bn at the end 4QFY15, making it the smallest bank in the listed private sector space, including both new and old generation private sector banks. Promoter group the Aga Khan Fund for Economic Development (AKFED) & Platinum Jubilee Investments holds ~16.3% stake. DCB services entails, corporate banking - 23%, SME -13%, Agriculture – 15%, Mortgages – 43%. As on 4QFY15, the bank had a network of 154 branches, with ~43% of branches in the western region.
Karthikeyan P +91-44-30007344 [email protected]
Cholamandalam Securities Limited Member: BSE,NSE,MSE Regd. Office: Dare House,2 (Old) # 234) N.S.C Bose Road, Chennai – 600 001. Website :www.cholawealthdirect.com Email id – [email protected] CIN U65993TN1994PLC028674
Chola Securities is a leading southern India based Stock broker. Our focus area of coverage within the Indian market is Mid and small caps with a focus on
companies from southern India.
Our Institutional Equities services are carried out in partnership with RCCR, a boutique Investment research and Corporate Advisory firm founded by a
team with extensive experience in the Asset management industry.
RESEARCH
Srinivasan V Head of Research* +91-44 - 4505 6003 [email protected]
Sathyanarayanan M Consumption +91-44 - 3000 7361 [email protected]
Michel Charles C Technicals +91-44 - 3000 7353 [email protected]
Karthikeyan P Macro &Financial Services +91-44 - 3000 7344 [email protected]
Prabhash Anand Cement & Engineering +91-44 - 3000 7363 [email protected]
Sreedevi K Associate +91-44 - 3000 7266 [email protected]
INSTITUTIONAL SALES
Venkat Chidambaram Head of FII Business & Corporate Finance* +91-44 - 24473310 [email protected]
Lakshmanan T S P Chennai +91-9840019701 [email protected]
Sudhanshu Kumar Institutional Equities* +91 - 9953175955 [email protected]
Santosh Kumar Sharma Mumbai +022-22617210 [email protected]
RETAIL SALES
Nikesh AHMEDABAD 079 – 30002968 / 69 [email protected]
Sathyanarayana N BANGLORE 080-22211160/61/62/63/64 [email protected]
Muthiah A N CHENNAI - HO 044 – 3000 7371 [email protected]
Baskaran S CHENNAI - Nungambakkam 044 – 28240052 / 54 [email protected]
Saravanan CHENNAI - Adyar 044 - 2452 2111 / 2333 [email protected]
A Jaganathan CHENNAI - Ambattur 044-42022155/26251141/42 [email protected]
V Kumar COIMBATORE 0422-4292041 / 4204620 [email protected]
Maneesh Gupta DELHI 011 - 30461161 / 62 / 63 [email protected]
Sunil Kumar GURGAON 0124 4054521 /8860745674 [email protected]
Srinivasa Reddy D V HYDERABAD 040-40126821 / 22 [email protected]
SudiptaBhaumik KOLKATA 033-44103638 / 39 [email protected]
Riken B Mehta MUMBAI 022-22617210 / 7203 [email protected]
Pravin S MADURAI 0452-2601195 / 96 [email protected]
SumukhSaurabh PUNE 020- 30225432 / 34 [email protected]
Sivaraman G SALEM 0427-2313226/4040226 [email protected]
M N Chandra Sekhar VIZAG 0891-6642718 [email protected]
Shakil Ahmed Choudhury Compliance Officer 044 - 30007226 [email protected]
*Employees of Business Partner - RCCR DISCLAIMER: This report is for private circulation and for the personal information of the authorized recipient only, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not provide individually tailor-made investment advice and has been prepared without regard to any specific investment objectives, financial situation, or any particular needs of any of the persons who receive it. The research analyst who is primarily responsible for this report certifies that: (1) all of the views expressed in this report accurately reflect his or her personal opinions about any and all of the subject securities or issuers; and (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of Cholamandalam Securities Limited makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. The views expressed are those of the analyst and the Company may or may not subscribe to all the views expressed therein Cholamandalam Securities Limited reserves the right to make modifications and alterations to this statements as may be required from time to time without any prior approval. Cholamandalam Securities Limited, its affiliates, directors and employees may from time to time, effect or have effect an own account transaction in or deal as agent in or for the securities mentioned in this report. The recipient should take this into account before interpreting the report. All investors may not find the securities discussed in this report to be suitable. Cholamandalam Securities Limited recommends that investors independently evaluate particular investments and strategies. Investors should seek the advice of a financial advisor with regard to the appropriateness of investing in any securities / investment strategies recommended in this report. The appropriateness of a particular investment or strategy will depend on an investor’s individual preference. Past performance is not necessary a guide to future performance. Estimates of future prospects are based on assumptions that may not be realized. Re-publication or redistribution in any form, in whole or in part, is prohibited. No part of this material may be duplicated in any form and/or redistributed without Cholamandalam Securities Limited prior written consent. The news items appearing in this are collected from various media sources and we make no representations that it is complete or accurate