Sandeep Sharma of Hem Securities was among the first to recommend an investment in DCB Bank. DCB was then languishing at Rs. 81. Sandeep promised a target price of Rs. 120 (50% gain) on the basis that DCB Bank has made a “remarkable turnaround in a tough environment by focus on consolidation and steady improvement in most of the parameters”. He added that “DCB is well-placed in terms of capital adequacy and asset quality, which are major concerns of the banking industry”.
Then, DCB Bank was awarded the prestigious title of a potential 100-bagger in Motilal Oswal’s 19th Wealth Creation Study. It is significant that DCB is the only representative of the banking/ financial space in the study.
After that, Saurabh Mukherjea came on record to recommend a buy of DCB on the basis that there are “unique things” about the Bank and that investors would reap “good returns going forward”. In my piece, I also referred to the statements by Narsee Munjee, Chairman, and Murali M. Natarajan, CEO, on how the objective is to be “conservative” and “careful” while lending but also to “double the balance sheet size in the next three years”.
Yet another resource that throws light on DCB Bank is the “initiating coverage” report by Emkay. Emkay recommends a buy on the basis that DCB Bank is “well positioned to exploit profitable business opportunities in its next growth phase”. Emkay states that DCB Bank has a ‘sound and profitable business strategy’, a ‘well-planned network expansion to drive business growth’ and that its ‘relentless asset quality focus will support profitability’.
Edelweiss has echoed the same sentiments in its research report.
Motilal Oswal’s latest “Initiating Coverage” report paints a similar optimistic picture of DCB Bank and assures that “re-rating is imminent”. It expects “core revenues to clock a healthy CAGR of 26% over FY14-17, driven by strong loan growth and largely stable margins”.
Motilal Oswal’s target price for DCB Bank is Rs. 155, which is a whopping 46% upside from the CMP of Rs. 106.
Now, the onus is on each of us to carefully go through the reports and take an informed and independent decision in the matter.