Mehabe score: 2 G Factor: 4 Piotski Score: 1 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 1.
Description
DCB Bank is a publicly held banking company engaged in providing banking and financial services and governed by the Banking Regulation Act, 1949 and the Companies Act, 2013.
Main Points
Ratios
Capital Adequacy Ratio – 18.32%#
Net Interest Margin – 3.75%#
Gross NPA – 1.96%
Net NPA – 0.59%#
CASA Ratio – 23%Site:DCBBANKMain Symbol:DCBBANK
Stock trades at 104.0, below its 50dma 104.62 and below its 200dma 104.81. The stock remains bearish on technicals
The 52 week high is at 126.50 and the 52week low is at 74.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.86 times its book value
-‘s median sales growth is 22.24% of last 10 years
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding is low: 14.88%
– has a low return on equity of 10.18% for last 3 years.
-Contingent liabilities of Rs.6319.36 Cr.
-Dividend payout has been low at 3.17% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 20.1x. Kotak Mah. Bank trades at the industry’s max P/E of 33.88x. DCBBANK trades at a P/E of 9.61x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 6.0. DCBBANK has a G-Factor of 4 and Piotski scoreof 1.
– Average 1 month return for industry is -1.7%. The max 1- month return was given by ICICI Bank: a return of 5.0 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 837.0 cr compared to Rs 902.0 cr for period ended Mar 2020, a fall of 7.2%
Operating Profits reported at Rs 341.0 cr for period ended Mar 2021 vis-vis 340.0 for period ended Mar 2020 .
Operating Margins expanded 304.7 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.51 compared to Rs 3.1 for previous quarter ended Dec 2020 and Rs 2.22 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3458.0 cr for period ended Mar 2021 vis-vis sales of Rs 3537.0 cr for the period ended Mar 2020, a fall of 2.3%. The 3 year sales cagr stood at 12.7%.
Operating margins shrank to 51.0% for period ended Mar 2021 vis-vis 152.0% for period ended Mar 2020, contraction of 10100.0 bps.
Net Profit reported at Rs 336.0 cr for period ended Mar 2021 vis-vis sales of Rs 338.0 cr for the period ended Mar 2020, falling 0.6%.
Company recorded a healthy Net Profit CAGR of 11.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 9.0% compared to 10.0% over the last 3 Years. – The stock has given a return of 27% on a 1 Year basis vis-vis a return of -14% over the last 3 Years. – The compounded sales growth on a TTM bassis is -2% vis-vis a compounded sales growth of 13% over the last 3 Years. – The compounded profit growth on a TTM basis is -1% vis-vis a compounded profit growth of 11% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 12.15% vis-vis 13.04% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 34.44% vis-vis 31.54% for Mar 2021
Conclusion
– Stock is trading at 0.86 times its book value
-‘s median sales growth is 22.24% of last 10 years – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding is low: 14.88%
– has a low return on equity of 10.18% for last 3 years.
-Contingent liabilities of Rs.6319.36 Cr.
-Dividend payout has been low at 3.17% of profits over last 3 years
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 104.62 and is trading at 104.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
