DCB Bank - Is it good for long term?

I am invested in DCB from 40-50 level and looking for long term investment.

Now considering current situation and downgrading of stock by analyst. I am failing to decide what to do.

Shall I add more as I feel its becoming attractive for long term OR hold OR Sell?

 

The reason for the downgrade is that the expansion plans will put pressure on the balance sheet as well as the profit and loss account. It takes a lot of capital investment to set up a new branch (high rentals, interior decoration etc) and the returns will not come in immediately. If the returns are subdued, the stock market is not going to like it.

 

Dear Deshboy,answer to your question is BIG YES.

 

DCB i dont see any near term positives. also management did not stand by it's decision and based on the reaction they partially changed the strategy. i think DCB should head lower apart from relief rallies. the most difficult thing to resurrect is reputation.

 

DCB Bank management is revising their decision after following stock price crash. How about it?

 

DCB is a HDFC Bank in the making. In immediate future, it may not show any appreciation but in long term surely it has the potential to grow big. Bigger than its peers. Have patience. Buy on dips.

 

Don't invest in any companies that are very aggressive in expansion without caring about profitability. DCB bank is an example of aggressive expansion with compromising profit. Big companies like Suzlon failed due to aggressive expansion.

 

Suzlon was a different story. It had foreign investments and foreign loans. But it is fighting back. A lot of analyst feel that Suzlon will soon recover. Regarding DCB, DCB has no choice. Do or Die situation. It will face severe competition from payment banks and nbfc. Some analyst feel that even large and medium banks will feel the competition due to payment banks. Not only DCB, other small banks will also have to do something to face competition. At least DCB is trying to fight. It may succeed or not. Can't say. Even if it fails DCB will surely be taken over by some big guy in PSU Banking space. So how would the investor lose?

 

considering your purchase price, you'll still have like 2x your investment
you can consider J&K Bank, City Union Bank

 

This is indeed wishful thinking.....

 

In a matter of few hours ...such contradicting views from you. First you say DCB is future HDFC bank and then you say this.

 

you misunderstood me. DCB is indeed HDFC Bank in the making. However, remember that DCB is still a small bank. All small banks will be facing competition from payment banks and NBFCs. DCB can fight back. DCB is trying to fight back and I am confident that DCB can succeed. If DCB is able to strengthen itself enough to fight the competition from payment banks and NBFCs then "DCB will be the HDFC Bank in the making". Even if it fails DCB will surely be taken over by some big guy in PSU Banking space. So how would the investor lose?