Axis Securities Initiates Buy On Small Cap Banking Stock, Sees 23% upside Potential

Axis Securities has come up with a Buy recommendation of DCB Bank, a small cap private sector bank. The brokerage has assigned Rs 150 apiece target price on the stock of the bank, claiming a potential upside of up 23% from its current level. DCB Bank has a market cap of Rs 3,801.55 Crore.

FY23 - A Year of Recovery, Accelerating Growth Momentum!

Axis Securities said, "DCB has regained its growth momentum in FY23 and we expect the same to sustain as the Bank looks to double its balance sheet size in the next 3-4 years. As DCB exit FY23, the Bank's collections in the core segment continued to improve and slippages stood at near-normalised levels. Keeping this in view, we expect credit costs to remain muted with no major challenges on the asset quality front. Moreover, operating leverage is expected to gradually kick-in. This along with improved fee income and moderate credit costs should compensate for the lower NIMs moving forward."

It added, "The stock is currently trading at an attractive valuation of 0.7x FY25E ABV and we value the stock at 0.9x FY25E ABV to arrive at a target price of Rs 150/share. The TP implies an upside of 21% from the CMP. We reiterate our BUY recommendation on the stock."

Stock Movement

The last traded share price of DCB Bank is Rs 121.95 apiece on BSE, down 1.26% from its previous close. Its 52-week high is Rs 141.20 apiece and 52-week low is Rs 75.55 apiece, respectively.

The shares jumped 4.20% in 1 week, 2.58% in 2 weeks and 1.34% in 1 month, respectively. It gave 57.62% positive return in 1 year, 15.94% in 2 years, and 51.91% in 3 years, respectively. It gave 28.09% negative return in 5 years.

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.