ICICIdirect.com has maintained hold rating on Development Credit Bank (DCB) with a target price of Rs 72 in its July 15 2011 research report.
“Development Credit Bank (DCB), again reported a profitable quarter with PAT of Rs 8.8 crore which was a disappointment as compared to estimates of Rs 12.1 crore resulting the in stock taking a knock. No tax provision and in line NII led to decent profit numbers. NPA provisions include Rs 3.3 crore on account of recent RBI guidelines. Sequentially flat credit growth was unsatisfactory considering lower base whereas the deposits surged 6.6% pushing costs up. We expect profits to continue with 23% PAT CAGR over FY11-13E.”
“At the CMP of Rs 60, DCB is trading at 1.5x its FY13E ABV. The bank’s QIP of Rs 150 crore is expected to be completed by FY12 and we believe prices to remain firm on account of the same. Also profitable growth being on track and RoA improving from 0.5% in Q1FY12 to 0.8% by FY13E, we maintain our valuations and target price of Rs 72. Investors who bought the stock at the initiating price of Rs 66 should hold the stock,” says ICICIdirect.com research report.
src-MC & Rediff
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