'Buy' DCB Bank Shares Says Motilal Oswal On Attractive Valuations, Sees 47% Upside

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Motilal Oswal Report

DCB Bank Ltd. has seen a healthy recovery in loan growth after witnessing sluggish trends during FY20-22, and we estimate loan growth to remain steady at ~23% CAGR over FY25-27E.

The bank's shift in loan mix toward retail loans has helped maintain healthy net interest margins. With a healthy retail mix, operating leverage at play, and a resilient NIM outlook, we expect DCB Bank to report sustained traction in the balance sheet and earnings growth. We thus estimate RoA to sustain at 0.9-1% for FY25-27E.

We find the current valuations at 0.52x FY26E adjusted book value attractive for a potential RoA of ~1% and ~26% earnings CAGR estimated over FY25-27E.

We reiterate our Buy rating with a target price of Rs 150 (premised on 0.8 times Sep’26E adjusted book value).

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