Review

DCB BANK 

Ticker : 532772
FV: Rs 10
52-Week H/L: Rs 206.50/154.85 

We had recommended DCB Bank in Volume No 34, Issue No 11 (dated Jan 1, 2018), when the scrip was trading at Rs 194. Our recommendation was backed by factors like its strong performance in Q2FY18. In Q1FY19, the NIM stood at 3.9 per cent, which was lowest in the last four quarters. The GNPA ratio has increased from 1.79 per cent to 1.86 per cent due to higher slippages, while the NNPA ratio stood flat. However, the advances and deposits grew by 31 per cent each on a YoY basis. The PAT for the quarter grew by 6.6 per cent YoY. It is focusing on extensive branch expansion to boost growth in deposits and advances, but the pressure on margins and asset quality is on a rising trend. On a short-term basis, we recommend investors to REDUCE EXPOSURE to the stock.

 

MAGMA FINCORP 

Ticker: 524000
FV:  Rs 2
52-Week H/L: Rs 193.50/133.65 

We had recommended Magma Fincorp in Volume No 34, Issue No 32 (dated May 28, 2018), when the scrip was trading at Rs 183. Our recommendation was backed by factors like its attractive valuations and strong AUM base with robust loan book. For the quarter ended June 2018, the company’s loan disbursals have grown by 25 per cent on a YoY basis. For the third consecutive year, the monsoon has been good, leading to growing demand from the rural segment. The management has estimated disbursement growth of 25-30 per cent and AUM growth of 17-18 per cent in FY19. As banks are facing asset quality pressures, the demand is shifting towards the non-banking finance companies like Magma Fincorp. Thus, we urge investors to HOLD the scrip