Broker’s Call: DCB Bank (Buy)

IDBI Capital Equity

Target: ₹233

DCB Bank delivered a strong Q2FY27, with record profit, improved operating leverage and cleaner asset quality, despite FCNR(B)-led margin pressure. Advances grew 21 per cent year on year to ₹64,127 crore while deposits rose 19 per cent to ₹76,839 crore.

NII increased 17 per cent to ₹699 crore, while NIM declined 10 bps quarter on quarter to 3.25 per cent. Other income grew 34 per cent to ₹249 crore, and PPOP rose 26 per cent to ₹383 crore.

Cost-to-income improved to 59.64 per cent, an 18-quarter low. PAT rose 29 per cent to ₹236 billion, marking the fifth consecutive quarter of record profit.

GNPA/NNPA declined to 2.29 per cent/0.73 per cent, both 23-quarter lows.

The bank raised $194 million in August and non-resident TDs increased to 9.1 per cent of TDs. High-cost bulk deposits were run down, reducing inter-bank TDs to 19 per cent. CASA declined to 22.3 per cent, while CD ratio improved to about 83.5 per cent as surplus liquidity was deployed.

Fresh slippages stood at ₹437 crore (2.94 per cent), with recoveries/upgrades covering 97 per cent. Non-gold slippages were 1.55 per cent, while gold slippages rose to 8.04 per cent. PCR excluding technical write-offs improved to 68.75 per cent, with ₹218 crore of floating provisions. CAR stood at 16.63 per cent.

The management retained 18-20 per cent growth guidance and expects NIM improvement in Q3/Q4. We maintain Buy with TP of ₹233, valuing the stock at 0.93x FY28E BVPS of ₹250.

Published on October 26, 2026