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ICICI Securities
DCB Bank (Buy)
CMP: ₹153.4
Target: ₹240
DCB Bank is a scheduled commercial bank. The Bank's segments include treasury operations, corporate/ wholesale banking, retail banking and other banking operations. The treasury operations segment includes all financial markets activities undertaken on behalf of the Bank’s customers, trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.
Key takeaways: a) management is cautiously calibrating growth amid a challenging macro-environment, but remains confident of reviving loan growth over next couple of quarters; b) management has laid down a detailed roadmap to reach an return on assets (RoA) of 1.25 per cent from about 1 per cent currently over next 2/2.5 years; c) management expects fee income/ assets to improve to 1.1 per cent from 0.9 per cent currently over the next 2/2.5 years; d) management is focussing on building best-in-class retail liability and plans to reduce top-20 depositor share to 5 per cent of total deposits over next couple of years from 12 per cent in March 2019.
DCB has revamped its business architecture over the past couple of years and expects it to help achieve the desired RoA of 1.25 per cent. Maintain ‘buy’ with a target price of ₹240.
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