The call at a glance

Anand Rathi Research, in a result update dated Oct. 25, 2026, said DCB Bank posted RoA of 1% and RoE of 13.8% for the September quarter, both ahead of its estimates. The brokerage values the stock at 1.1x FY29e price to adjusted book and notes that its numbers do not yet factor in an impending capital raise. The levels investors need are set out below, styled as station boards on the line.

Valuation basis: 1.1x FY29e P/ABV. Shares outstanding about 32.2 crore. Foreign institutions lifted their stake to 15.5% in September from 13.5% in June.

Quarter timetable: earnings ran ahead of schedule

Profit growth comfortably outstripped balance-sheet expansion. Core operating profit rose 26.2%, the brokerage said, as fee income jumped 23.4% and operating costs grew slower than expected, more than offsetting the margin squeeze.

Coach composition: which books pulled the train

Advances grew 21.1% year on year, quickening from 17.1% in the June quarter. Gold loans did the heavy lifting on the back of a larger direct-assignment book, while corporate credit, mostly to non-bank lenders, and agri loans added momentum. Mortgages, the bank's anchor franchise, idled at single-digit growth. Each coach below shows a book's year-on-year growth.

• Gold has a speed limit. Including co-lending and direct assignment, gold loans are capped at 25% of total assets, against about 23% now, so the fastest coach cannot keep accelerating.
• Guidance stays on track. Management targets 18-20% business growth in FY27, and Anand Rathi models advances rising 18% in FY27e and 20% in each of the next two years.
• Deposits rebuilt with care. Deposits rose 18.6% to about Rs 76,839 crore as the bank let costly bulk money run off after raising about Rs 1,730 crore through FCNR(B) deposits. The CASA ratio improved 65 basis points to 22.3%.

Signal check on asset quality

Stress ticked up in one carriage but the line stays clear. Gross slippages rose to 2.92% from 2.71% in the June quarter, though they were lower than 3.14% a year earlier. The rise came almost entirely from gold, where slippages climbed to 8% from 7.3%. Management said 97% of fresh slippages are being recovered or upgraded, keeping net slippages to just 7 basis points.

That floating buffer, built ahead of the expected-credit-loss transition targeted for March, should cushion any one-time hit from the new accounting regime.

Margin detour, fee express

Net interest margin fell 10 basis points to 3.25% even though the cost of funds eased 8 basis points and yields held broadly steady. The culprit was timing: surplus liquidity sat idle for most of the quarter and was deployed only near its close. Anand Rathi expects the margin to recover as that cash is put to work and the recent repo rate hike flows through to loan yields. It models NIM at 3.4% in FY27e and 3.5% by FY29e.

Costs remain on a short leash. Opex to assets rose 6 basis points to 2.49%, but management expects it to stay below 2.5%. Together with sustained fee growth and moderate credit costs, the brokerage sees 150-200 basis points of RoE expansion over the next two years. The track gradient below traces that climb using its ratio forecasts.

The forecast timetable

The brokerage nudged up FY27e and FY28e net interest income by 3.1% and 3.7%, while leaving profit estimates almost unchanged, up 0.3% and 0.4%. It sees net profit compounding at about 24% a year from FY26 to FY29e.

Coupling the target together

At 0.7x FY29e adjusted book and 4.6x FY29e earnings, the stock trades well below the 1.1x multiple Anand Rathi applies. Netting forecast net NPAs off the FY29e book value gives an adjusted book of roughly Rs 284 a share, which at 1.1x couples neatly to the Rs 312 target.

Adjusted-book bridge derived by TopNews from Anand Rathi's FY29e book value, net NPA ratio, advances and share count.

Caution orders on the line