DCB Bank Upgraded to 'Hold' Rating by MarketsMOJO for Strong Lending Practices and Attractive Valuation

DCB Bank, a smallcap private bank, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This decision was based on the bank's strong lending practices, with a low Gross NPA ratio of 3.29%. Additionally, the bank has a Very Attractive valuation with a 0.7 Price to Book Value and a ROA of 0.8.
One of the key reasons for the upgrade is the stock's current discount compared to its average historical valuations. Despite generating a return of 4.39% in the past year, the bank's profits have risen by 11.6%, resulting in a PEG ratio of 0.6. This indicates that the stock is undervalued and has potential for growth.

Furthermore, DCB Bank has a high institutional holding of 37.71%, which suggests that these investors have better capability and resources to analyze the fundamentals of the company compared to retail investors.

However, the bank's recent financial results for September 2024 were flat, with a CREDIT DEPOSIT RATIO(HY) of 81.54% and a PBDIT(Q) of Rs 50.48 cr. Additionally, the OPERATING PROFIT TO NET SALES (Q) was at its lowest at 3.22%. These factors may have contributed to the stock's technical position in a Mildly Bearish range, with the Bollinger Band being Bearish since 11 November 2024.

Despite these challenges, DCB Bank has underperformed the market in the last year, generating a return of only 4.39% compared to the market (BSE 500) returns of 27.99%. However, with its strong fundamentals and attractive valuation, the stock has the potential to turn around and deliver better returns in the future. As such, MarketsMOJO has upgraded its rating to 'Hold' for DCB Bank.