Shares of DCB Bank plunged nearly 20 per cent to Rs 106.80 on Wednesday
after the private sector lender's second-quarter earnings disappointed
the Street.
It reported a 10 per cent decline in net profit at Rs 36.93 crore for the second quarter ended September, hurt by higher provisioning for bad loans.
The lender had announced its Q2 earnings near the close of Tuesday's trading session. The stock fell nearly 3 per cent yesterday.
Provisioning for bad loans and other contingencies rose significantly to Rs 21.67 crore during the quarter under review from Rs 13.75 crore a year ago.
DCB Bank's total income during the July-September quarter of 2015-16 rose to Rs 464.87 crore, compared to Rs 371.83 crore in the year-ago period.
On the asset front, the lender also saw a slight deterioration. Its gross non-performing assets (NPAs) as a percentage of gross advances moved slightly up at 1.99 per cent as against 1.9 per cent a year ago. Similarly, net NPAs or bad loans were at 1.16 per cent of the net advances in the second quarter, from 1.07 per cent a year earlier.
Slippages or fresh loans that turned bad rose sharply to Rs 62 crore in Q2 as compared to Rs 42 crore in the same period a year ago.
The results were below expectations, said Mehraboon Irani of Nirmal Bang Securities. He attributed the selloff in DCB Bank to over-ownership among institutions and rich valuations. "DCB is one of those stocks in which people have made very good money over the last 3-4 years. On top of it, it is largely a favoured stock by quite a few funds. In that context, the earnings were disappointing."
DCB stock had outperformed in the past one year as compared to the Bank Nifty. Mr Irani remains positive on the stock from a long-term perspective.
Brokerage Kotak downgraded the stock to sell from buy following the earnings announcement, with a target price of Rs 100.
At 10:24 a.m., the stock was locked in the 20 per cent lower circuit limit as compared to a flat Nifty.
It reported a 10 per cent decline in net profit at Rs 36.93 crore for the second quarter ended September, hurt by higher provisioning for bad loans.
The lender had announced its Q2 earnings near the close of Tuesday's trading session. The stock fell nearly 3 per cent yesterday.
Provisioning for bad loans and other contingencies rose significantly to Rs 21.67 crore during the quarter under review from Rs 13.75 crore a year ago.
DCB Bank's total income during the July-September quarter of 2015-16 rose to Rs 464.87 crore, compared to Rs 371.83 crore in the year-ago period.
On the asset front, the lender also saw a slight deterioration. Its gross non-performing assets (NPAs) as a percentage of gross advances moved slightly up at 1.99 per cent as against 1.9 per cent a year ago. Similarly, net NPAs or bad loans were at 1.16 per cent of the net advances in the second quarter, from 1.07 per cent a year earlier.
Slippages or fresh loans that turned bad rose sharply to Rs 62 crore in Q2 as compared to Rs 42 crore in the same period a year ago.
The results were below expectations, said Mehraboon Irani of Nirmal Bang Securities. He attributed the selloff in DCB Bank to over-ownership among institutions and rich valuations. "DCB is one of those stocks in which people have made very good money over the last 3-4 years. On top of it, it is largely a favoured stock by quite a few funds. In that context, the earnings were disappointing."
DCB stock had outperformed in the past one year as compared to the Bank Nifty. Mr Irani remains positive on the stock from a long-term perspective.
Brokerage Kotak downgraded the stock to sell from buy following the earnings announcement, with a target price of Rs 100.
At 10:24 a.m., the stock was locked in the 20 per cent lower circuit limit as compared to a flat Nifty.
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