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The board of DCB Bank on Monday announced the opening of a qualified institutional placement and fixed the floor price at ₹177.39 a share. The private sector lender’s board of directors on March 7 had approved a resolution to raise as much as ₹400 crore through a QIP.
Through the issue, the bank plans to raise ₹400 crore. Shares of DCB Bank closed at ₹181.95 on the NSE.
The bank may offer a discount of 5 per cent on the floor price, it said in a notification to the stock exchanges.
The bank had reported a lower net profit of ₹53 crore for the fourth quarter ended March 2017, on higher provisioning and higher tax expense. The bank had recorded a profit of ₹70 crore in the same quarter last fiscal.
For FY17, the bank’s profit after tax was ₹200 crore as against ₹195 crore reported in FY16. Net interest margin — a key metric in determining the success of a bank’s investment decisions — for FY17 stood at 4.04 per cent as against 3.94 per cent in FY16.
‘Surprising performance’ HDFC Securities, which maintains a ‘buy’ rating with a price target of ₹180, said: “DCB Bank has yet again surprised us with its net interest margin performance, despite a rise in low-yielding corporate loans and a decline in the CASA proportion. DCB Bank’s NIM was stable q-o-q at about 4 per cent, a key positive factor. Its NIM was cushioned with a 10 bps drop in cost of funds and steady yields.”
CESC Research said: “Healthy loan book growth, branch expansion and well-maintained asset quality paint a positive picture for the bank. Considering the elevated cost-to-income ratio, given the branch expansion plan going forward, which will keep the return ratios lower, we maintain the ‘Marketperformer’ rating on the stock with a target price of ₹170.”
Centrum differs But Centrum Broking has downgraded the stock to ‘hold’ with a price target of ₹150. “The revision in our rating follows the sharp surge in the stock.
“We, however, have increased our target multiple which is based on the premise of yet another quarter of strong earnings and balance sheet growth, well contained operating costs and improved profitability,” said Centrum Broking.
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