Dhanlaxmi Bank Reports Strong Asset Quality Amid Increased Institutional Interest

Dhanlaxmi Bank, a small-cap player in the private banking sector, has recently undergone an adjustment in its evaluation. This revision reflects a notable shift in the bank's financial metrics, particularly for the quarter ending March 2025. The bank reported a gross non-performing asset (NPA) ratio of 2.98%, which is the lowest recorded, indicating a strong asset quality. Additionally, the credit deposit ratio reached a high of 74.68%, showcasing effective management of deposits and loans.
The bank's operating profit to net sales ratio was reported at -1.26%, while net interest income stood at Rs 134.23 crore. Furthermore, cash and cash equivalents were robust at Rs 992.40 crore, and interest earned reached Rs 350.62 crore. Despite these positive indicators, the non-operating income constituted 158.54% of profit before tax, suggesting a reliance on non-core income sources.

In terms of valuation, Dhanlaxmi Bank's metrics indicate a fair valuation compared to its peers, with a price-to-book value of 0.81 and a return on equity of 4.78%. The bank's recent performance has attracted increased participation from institutional investors, who have raised their stake by 8.2% in the last quarter.

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