DCB Bank

Formerly Development Credit Bank, DCB Bank reported 8.3% QoQ rise in Net Interest Income at Rs. 140 crore for Q1FY16, thanks to interest cost growing at only 5.9% as against 6.7% growth in interest income. As bank’s Other Income jumped to Rs 63 crore from Rs. 46 crore in March 2015 quarter, thanks to higher treasury gains, total income for the quarter rose 10% QoQ to Rs. 467 crore.  

Net profit however dropped sequentially to Rs. 47 crore from Rs. 63 crore QoQ due to higher provisions by Rs 4 crore at Rs. 18 crore, and partly due to negative tax expense of Rs. 9 crore in the preceding quarter for year-end adjustment. Also, asset quality suffered, as gross NPAs ballooned to 1.96% of total advances while net NPAs rose even more sharply to 1.22%, from 1.01%, as of 31-03-15.

Based on Monday’s closing price of Rs 141, share is currently ruling at a PE multiple of 21 times and PBV multiple of 2.3 times, based on FY16 expected numbers, which is not very cheap for the 155 branched bank, given its size and deteriorating asset quality.