wehre is the intiating report ?
We reinitiate coverage on Development Credit Bank (DCB) with Buy and price target of `84/share. We expect the Bank to return to profitability, led by reviving business growth and sharp fall in credit costs. We estimate FY12 RoA and RoE at 1% and 10% respectively.
n Business growth to revive. With restructuring of balance-sheet largely in place, we expect a revival in business growth - 22% CAGR over FY10-13e. Management is increasing focus on secured loans and their diversity, in addition to a larger share of retail deposits (>70% CASA+term) in liabilities. Hence, NIM expansion to 3.2% in FY13e from 2.6% in FY10 is likely to be led by a better credit-deposits ratio and a stronger liability franchise.
Productivity gains to help profitability. DCB's operating leverage would improve owing to likely revival in business. Also, management targets reining-in operating expenses (<10% CAGR over FY10-13e). We estimate cost-to-assets to decline to 2.7% by end-FY12e from 3.3% in FY10, hence improving profitability.
Credit costs to plummet. Gross NPAs declined to 8.5% in Sep '10 from 11.3% in Jan '10. DCB's aggressive focus on managing asset quality and NPA collections is likely to lower credit costs, to 211bps in FY11e and 116bps in FY12e. NPA coverage including technical write-offs is a healthy 75.2%.
Valuation and risks. At our target price of `84, DCB would trade at 2.6x FY12e and 2.2x FY13e ABV. Our price target is based on the two-stage DDM (CoE: 16.2%; beta: 1.3; Rf: 7.5%). Risks: higher-than-expected credit cost; change in management
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.Nothing in this article is, or should be construed as, investment advice.
--
For Anything related with Stock market be Online at
http://www.niftyviews.com/
Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234
FOR TRIAL STOCK/NIFTY/OPTION CALLS
You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group.
To post to this group, send an email to STOCKRESEARCHER@googlegroups.com
To unsubscribe email
Stockresearcher-unsubscribe@googlegroups.com
for more info visit
http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB
.
This is Not a Spam Mail.
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture."
--
Mayank Patwardhan
Equity Institutional Dealer
Khandwala Securities Ltd.
Mob. No -+91-9222211151
And Then....
--
For Anything related with Stock market be Online at
http://www.niftyviews.com/
Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234
FOR TRIAL STOCK/NIFTY/OPTION CALLS
You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group.
To post to this group, send an email to STOCKRESEARCHER@googlegroups.com
To unsubscribe email
Stockresearcher-unsubscribe@googlegroups.com
for more info visit
http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB
.
This is Not a Spam Mail.
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture."
Posts
0 comments:
Post a Comment