Why DCB Bank shares rallied 11% post Q2 results? Target prices
DCB Bank shares rose 11.02 per cent to hit a high of Rs 143 apiece. The stock is up 20 per cent in 2025 so far against a 14 per cent rise in the BSE Financial Services index.
- Oct 20, 2025,
- Updated Oct 20, 2025 9:29 AM IST
Shares of DCB Bank rallied 11 per cent in Monday's trade after better-than-expected September quarter results. Analysts noted the quarter was marked by broad-based outperformance across key parameters — including robust above-system loan growth, margin expansion, opex moderation, strong fee income, and benign asset quality.
NIM expanded during the quarter, contrary to expectations of contraction, said SMIFS.
"Credit costs were contained at 31bps, lower than both management guidance (
Besides, DCB Bank's fee income rose a strong 18 per cent sequentially, led by third-party distribution and trade-related income.
"We believe DCB remains well-placed to achieve its 1 per cent ROA / 14 per cent ROE guidance by FY27, driven by solid loan growth, NIM expansion, fee traction, productivity benefits, and continued benign asset quality. Valuation remains attractive, with the stock trading at ~0.6x FY27E P/B. Maintain BUY," it said.
DCB Bank shares rose 11.02 per cent to hit a high of Rs 143 apiece. The stock is up 20 per cent in 2025 so far against a 14 per cent rise in the BSE Financial Services index.
MOFSL said DCB Bank reported a steady quarter with a beat in earnings amid lower provisions, healthy NII, and controlled opex. Margin improved 3 basis points QoQ, and the bank expects it to improve further going forward if no further rate cut occurs.
"Business growth was healthy with increased focus on gold loans and co-lending. Asset quality improved with slippages moderating sequentially, and management expects credit cost to remain below 45bp for the full year. We tweak our earnings estimates for FY27 and project an FY27E RoA/RoE of 1.01 per cent/15.3 per cent. Reiterate BUY with a target of Rs 165," MOFSL said.
For the quarter, the bank reported a profit after tax of Rs 184 crore, up 18 per cent over year-ago quarter's Rs 155 crore. Advances grew 19 per cent YoY. Gross NPA as on September 30, 2025, came in at 2.91 per cent. Net NPA stood at 1.21 per cent as on September 30, 2025. The Provision Coverage Ratio (PCR) as on September 30, 2025 was at 74.15 per cent and PCR without considering Gold Loans NPAs was at 74.81 per cent.
Capital Adequacy continued to be strong and as on September 30, 2025, the Capital Adequacy Ratio was at 16.41 per cent.
Praveen Kutty, Managing Director & CEO said, “The growth of deposits and advances continues to be strong. Strides made in reduction of cost of deposits and cost of borrowing has helped in NIM uptick. The rigor on employee productivity and technology adoption is driving down the Cost to Average Assets for the fifth consecutive quarters. Improved collections and recovery have resulted in much lower credit costs. We expect this momentum to continue in the coming quarters as well.”
Shares of DCB Bank rallied 11 per cent in Monday's trade after better-than-expected September quarter results. Analysts noted the quarter was marked by broad-based outperformance across key parameters — including robust above-system loan growth, margin expansion, opex moderation, strong fee income, and benign asset quality.
NIM expanded during the quarter, contrary to expectations of contraction, said SMIFS.
"Credit costs were contained at 31bps, lower than both management guidance (
Besides, DCB Bank's fee income rose a strong 18 per cent sequentially, led by third-party distribution and trade-related income.
"We believe DCB remains well-placed to achieve its 1 per cent ROA / 14 per cent ROE guidance by FY27, driven by solid loan growth, NIM expansion, fee traction, productivity benefits, and continued benign asset quality. Valuation remains attractive, with the stock trading at ~0.6x FY27E P/B. Maintain BUY," it said.
DCB Bank shares rose 11.02 per cent to hit a high of Rs 143 apiece. The stock is up 20 per cent in 2025 so far against a 14 per cent rise in the BSE Financial Services index.
MOFSL said DCB Bank reported a steady quarter with a beat in earnings amid lower provisions, healthy NII, and controlled opex. Margin improved 3 basis points QoQ, and the bank expects it to improve further going forward if no further rate cut occurs.
"Business growth was healthy with increased focus on gold loans and co-lending. Asset quality improved with slippages moderating sequentially, and management expects credit cost to remain below 45bp for the full year. We tweak our earnings estimates for FY27 and project an FY27E RoA/RoE of 1.01 per cent/15.3 per cent. Reiterate BUY with a target of Rs 165," MOFSL said.
For the quarter, the bank reported a profit after tax of Rs 184 crore, up 18 per cent over year-ago quarter's Rs 155 crore. Advances grew 19 per cent YoY. Gross NPA as on September 30, 2025, came in at 2.91 per cent. Net NPA stood at 1.21 per cent as on September 30, 2025. The Provision Coverage Ratio (PCR) as on September 30, 2025 was at 74.15 per cent and PCR without considering Gold Loans NPAs was at 74.81 per cent.
Capital Adequacy continued to be strong and as on September 30, 2025, the Capital Adequacy Ratio was at 16.41 per cent.
Praveen Kutty, Managing Director & CEO said, “The growth of deposits and advances continues to be strong. Strides made in reduction of cost of deposits and cost of borrowing has helped in NIM uptick. The rigor on employee productivity and technology adoption is driving down the Cost to Average Assets for the fifth consecutive quarters. Improved collections and recovery have resulted in much lower credit costs. We expect this momentum to continue in the coming quarters as well.”