DCB Bank shares climb 6% on report of PE capital infusion talks 

DCB Bank Ltd shares climbed 6 per cent in Wednesday's trade after a media report quoting sources suggested that that the private bank is in talks with private equity (PE) firms for capital infusion.

As per Moneycontrol, CNBC TV18 sources suggested that Chrys Capital is likely to be one of the PE firms in talks with DCB Bank, while noting that lender's board had given nod for Rs 2,000-crore fund raise, including Rs 1,500 crore through equity issuance.

Following the development, DCB Bank shares rose 6.10 per cent to hit a high of Rs 220 on BSE.

Private equity players are allowed to acquire 9.99 per cent stake in banks with RBI approval, the note suggested.

DCB Bank has received nine 'Buy' recommendations and one 'Hold' call in August. Its 12-month consensus target price at Rs 233.38 suggested a 7 per cent potential upside. ICICI Securities on August 20 said DCB Bank was among its preferred midcap lenders. It suggested a target of Rs 260 on the stock. Antique Stock broking has a 'Buy' with a target of Rs 200 on the stock. YES Securities and Phillip Capital find the stock worthy of Rs 240.  MOFSL sees the stock at Rs 235. Investec set a target of Rs 245 on the stock.

Equirus, which hosted the bank at its Equirus India Growth Summit, noted that the bank has been consciously reducing the Peak TD differential with larger banks has brought it down from 110-120 bps to 70 bps.

Incrementally it is targeting to take it to 45 bps.

Equirus said DCB Bank has a well-diversified base with no state more than 20 per cent assets (Maharashtra). While bank may not get much FCNR(B) deposits, it expects wholesale TD rates to improve.

"Bank has been focusing on core fee income Bank has been monitoring the employee base. Opex/ Assets has improved from 2.89 per cent to 2.42 per cent largely on account of improved staff productivity," Equirus said.

It said the bank's guidance build in a margin of safety. Focus is on consistently meeting the guidance despite unexpected events, it said.

Equirus said DCB Bank's focus is to grow balance sheet at 18-20 per cent and bottom line by 18-20 per cent, adding that gold loan is 20 per cent of the book at present and co-lending is Rs 7,000 crore, mostly gold loans.