DCB hits a lifetime high

At a time when all banks are grappling with reality, getting hit with mounting NPAs and fear of defaults only growing, investors are rightly keeping away from most of the “BIG” banks. But amidst all this sell off in the sector, one small bank, DCB Bank has quietly been hitting new lifetime highs. On 13th June, it hit a new record high at Rs.210.50 and today too, it hit a new high lifetime at Rs.211.20. It continues to trade firmly in the green.

Is this contrarian buying or are we missing something here? The contrarian buying is because amongst this entire lot of banking stocks, this one seems the safest bet, at least for the marketmen.

Catering to mainly self-employed and small business segment, its promoter is the Aga Khan Fund for Economic Development, which holds over 16% stake in the bank. When the Bank had declared its performance for Q4FY17, the market was not happy as both, its asset quality as well as profitability had slipped.

The Bank reported a 24% (YoY) drop in net profit at Rs.53 crore on account of higher provisioning and tax outgo. Provisions rose 11% (QoQ) at Rs.34 crore while YoY, it was up 24.5%. In terms of asset quality, Gross NPA rose from 1.55% to 1.59% (QoQ) and Net NPA rose to 0.79% from 0.74%.

Yet, today, compared to the others, it looks like a star and that is probably the reason why investors are taking long positions in the stock.