Markets
BSE See NSE See 39,167.17
-284.90 (-0.72%)
collapse Related Readings collapse

Getting Stronger - Development Credit Bank

| 11/8/2010 1:13 PM Monday

Development Credit Bank (DCB) has turned into black in Q2FY11 after remaining in red for the previous seven quarters. Interestingly, the recently announced result has seen a clear improvement in performance that now provides a positive outlook on the bank’s profitability going forward. The bank has grown its balance-sheet size by 24.1 per cent to Rs 6,937.6 crore for Q2FY11 from Rs 5,590 crore in Q2FY10. Its advances have grown by 29.6 per cent to Rs 3,839.8 crore on a YoY basis from Rs 2,961.7 crore for Q2FY10 and its total deposits witnessed a growth of 22 per cent with the retail deposits contributing 78.7 per cent to the total deposit base.

The CASA deposits vis-à-vis the total base works out to 34.6 per cent with a growth of 14.7 per cent on a YoY basis for Q2FY11. Its retail banking advances is now 32.8 per cent of the total advances as against 34.5 per cent in the same period last year. The decrease is mainly because the bank has stopped providing personal loans and unsecured vehicle and equipment loans - a conscious decision taken by the management to contain the non-performing assets (NPAs). DCB has maintained its net interest margins (NIM) at 3.1 per cent as against 2.5 per cent last year for Q2FY11. This has been better than the expectation of 2.8-2.9 per cent. The cost of funds has also witnessed a decline for Q2FY11 and it is now 5.58 per cent on a YoY basis as against 6.58 per cent for Q2FY10. Additionally, after being profitable in the current quarter, RBI may allow more branch licenses in the coming quarter which in turn will increase the CASA base for the bank. Hence, although the management has provided guidance for NIM of 2.8 - 2.9 per cent it can be said that the NIM may improve further in the coming years.

As of July 2010, DCB has received permission from the RBI to open two new rural/semi-urban branches in Gujarat. This will take the total branch network to 82 units. The bank is able to reduce its provisioning to a suitable extent whereby the total gross NPAs have come down to 7.6 per cent of advances from 11.2 per cent last year and the net NPAs have come down to 1.9 per cent as against 4.7 per cent last year. On the revenue side, the total provisioning has been reduced by 50.8 per cent on a YoY basis which has been the key trigger for profitability. The management is confident of maintaining the net NPAs below 2 per cent for FY11 which is assumed to be an achievable target. On the financial front, for Q2FY11 the company has posted decent results. The topline grew by 14.56 per cent on a YoY basis for Q2FY11 at Rs 127.88 crore as against Rs 111.63 crore. The bottomline stood at a profit of Rs 4.82 crore for Q2FY11 as against a loss of Rs 16.93 crore for Q2FY10. On the valuation front, DCB trades at an adjusted price-to-book value of 2.50 times. The change in management has also helped the bank to increase its focus on the above-mentioned financing and has turned DCB into black in the recently concluded quarter. It therefore looks like an ideal candidate to find its place in one’s portfolio for a long-term perspective.

 

Find More Articles on: Fundamental Picks, Stock Recommendations, DSIJ Magazine, Low Priced Scrip, Product, Mid Cap

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

Index trend and stocks in action June 17, 2019

Karan DSIJ / Article rating: 5.0

In case Nifty falls below the level of 11,770, it may test the 11,600 mark in the near term. To move upside, the bulls need to move above the 20-DMA once again and sustain for at least two to three days. Only then, the bulls will gain confidence. Stocks in news: BHEL, Elecon Engineering Company, PG Electroplast, FDC, Divi’s Laboratories, Symphony, Coromandel International, Voltas.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.