Motilal Oswal Initiates Coverage of DCB Bank with a Price Target of Rs 235

DCB Bank Posts Strong Quarterly Results, Maintains Growth Momentum

DCB Bank (DCBB) has reported a 16.1% year-over-year (YoY) growth in profit after tax (PAT) at INR2.06 billion, which is in line with expectations. The bank's net interest income (NII) grew by 17% YoY to INR6.5 billion, a 5% increase from the previous quarter. Net interest margins (NIMs) expanded by 12 basis points (bp) from the previous quarter to 3.39% in 4QFY26, driven by lower funding costs and a better loan mix.

The bank's other income declined by approximately 3% YoY and 4.5% QoQ to INR2.1 billion, which is 7% lower than Motilal Oswal Financial Services Limited's (MOFSLe) estimates. Operating expenses (Opex) grew by approximately 11% YoY, but remained flat from the previous quarter at INR5.2 billion. Profit before provisions and taxes (PPoP) stood at INR3.4 billion, a 12% YoY increase and a 6% increase from the previous quarter.

Key Financial Highlights

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Despite a muted treasury performance, the bank has maintained its growth momentum. Motilal Oswal Financial Services Limited largely maintains its estimates for FY27 and projects an FY27E return on assets (RoA) and return on equity (RoE) of 1.01% and 15.1%, respectively. The research firm reiterates its BUY rating for DCB Bank with a target price of INR235, based on 1.0x September 2027 estimated adjusted book value.