HDFC Securities is seeing a rise of 45% in this banking stock. should you buy
The share price of DCB Bank has been in a consolidation phase after hitting a 52-week high of ₹106 on the NSE in November 2021. It showed some upside signals in April 2022 after hitting a 52-week low of ₹67.85 at the end of March 2022. However, the stock further comes under selling pressure in June 2022 and is on the verge of breaking its 52-week low made in March. However, the banking stock bounced back from its recent lows and today DCB share price is around Rs 86 level. HDFC Securities believes that the stock may go up to Rs 2,126 level in the long term, giving a return of around 45 per cent to its shareholders.
Highlighting the fundamentals driving the share price of DCB Bank, HDFC Securities’ report says, “Earnings of DCB Bank were well ahead of our estimates, driven by massive credit growth (+17 per cent YoY) and low This was driven by strong traction in credit cost (50 bps – yearly), partially offset by higher OPEX intensity, while gross slippage increased to around 8.3 per cent, driven by Gold Loan and KCC Portfolio (Q4FY22: 5.5 per cent). was driven, a healthy upgrade/recovery led to a modest 10bps sequential improvement in GNPA. 4.2 percent.”
“Stress pool remains sticky (NNPA+ restructured book at around 8 per cent debt); however, management has improved collection efficiency and a granular and secured loan book (around 95 per cent). Stubborn stress pool and business throughput to drive With higher OPEX intensity, we see limited near-term leverage for the reflation to return ratio,” the brokerage said.
On its suggestion to positional investors with regard to the share price of DCB Bank, HDFC Securities report says, “We are expected to reduce our FY23/FY24 earnings estimates to 7%/5% to factor in NIM moderation.” and maintain ADD with a revised TP of ₹ 126.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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