DCBBANK

Q2 FY26 Summary & Investment Outlook

Q2FY26 posts Record profit, presents strong fundamentals, and attractive valuation 🔹 Record-Breaking Profit & Stock Rally - Q2 FY26 net profit hit an all-time high of ₹184 crore, up 19% YoY. - Stock surged over 20% post-results, reflecting investor optimism. 🔹 Valuation Appeal - Despite the rally, trades at 0.7x FY27e book and 0.9x FY25 trailing book. - Re-rating potential hinges on sustained performance and profitability. 🔹 Loan & Deposit Growth - Net advances rose 19% YoY to ₹52,975 crore as of September 2025. - Targeting 18–22% annual loan growth; aims to double balance sheet in 3–3.5 years. - Deposits grew 19% YoY; CASA ratio remains low at 23%. - Deposit granularity improved—top 20 depositors now form just 6.86% of total deposits (vs. 15% in FY18). 🔹 Product Mix & Margin Expansion - Mortgages form 53% of loan book; home loans dominate mortgage portfolio. - Focus shifting to higher-yielding business loans (LAP); co-lending capped at 15%. - NIM improved to 3.23% in Q2; expected to expand further as fixed deposits reprice and yields improve. 🔹 Operational Efficiency - Cost-to-average-assets ratio improved to 2.43%; operating expenses rose just 4% YoY. - Workforce reduced by 1,118 employees; operating leverage expected to support margins. 🔹 Asset Quality & Credit Cost - Gross and net NPAs declined; slippage ratio saw sharp improvement. - Credit cost contained at 31 bps; management guides sub-45 bps for FY26. - Restructured book remains elevated at ₹867 crore (1.6% of advances); under close watch. 🔹 Capital Infusion - Promoter stake increased to 16.27% post ₹83 crore infusion approved by RBI. - Strong growth, margin tailwinds, cost control, and low credit cost position DCB Bank for sustained earnings momentum.