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Business News/ Markets / Stock Markets/  Axis Securities sees 55% upside in this banking share. Should you buy?

Axis Securities sees 55% upside in this banking share. Should you buy?

Axis Securities believes that DCB share price may go up to ₹115 per share in long term

DCB Bank picked up momentum in terms of both advances and deposits. (MINT)Premium
DCB Bank picked up momentum in terms of both advances and deposits. (MINT)

DCB share price has been in base building phase since beginning of June 2022. However, the banking stock has given some upside for last few sessions and Axis Bank Securities believe that the banking share may continue to attract buyers' interest on every fall in long term. The brokerage report says that DCB share price may go up to 115 apiece levels. DCB share price today is around 75 that means the brokerage is expecting around 55 per cent rise in this banking scrip.

Speaking on DCB Bank share price outlook, the brokerage said, "Despite operating primarily in the self-employed segment, DCB has been able to manage the asset quality stress fairly well. The collections have held up well and with the trend likely to sustain, the secured nature of the bank’s restructured book hints at credit costs moderating going forward. The positive trends in terms of a strong recovery pipeline and moderation in slippages will aid in asset quality improvement. With asset quality stress and credit costs having peaked out, the balance sheet growth and improving return ratios should drive valuations for DCB."

Highlighting upon the key financial performance of DCB Bank, Axis Securities research report says, "The bank’s focus on maintaining asset quality and improving collections along with its cautious approach to growth slowed down its disbursements, and consequently growth. However, with macros normalizing, DCB picked up momentum in terms of both advances and deposits. NII growth remained tepid at 6% YoY owing to higher slippages and excess liquidity weighing on yields. However, it was partially offset by a 46bps improvement in CoF owing to a benign interest rate environment. Thus, NIMs remained largely stable at 3.56% in FY22, which were further supported by higher recoveries in Q4FY22. While fee income growth remained healthy at 22% YoY, lower treasury income dented non-interest income which remained flattish YoY."

On suggestion to positional investors in regard to DCB Bank shares, Axis Securities said, "We retain our estimates and maintain our BUY recommendation on the stock with a target price of 115/share."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Published: 22 Jun 2022, 12:33 PM IST
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