Target: ₹216CMP: ₹190.20DCB Bank reported a strong Q1-FY27, delivering its highest-ever quarterly profit, driven by lower funding costs, improving operating efficiency and stable asset quality. Management reiterated its focus on consistent, predictable and sustainable growth, led by stronger liabilities, higher productivity and disciplined capital allocation.Advances grew 17.1 per cent y-o-y to ₹59,951 crore, driven by mortgages, gold loans and Agri and Inclusive Banking, while deposits increased 20.1 per cent y-o-y to ₹74,482 crore. NIM expanded 15 bps y-o-y to 3.35 per cent and core fee income grew 31 per cent y-o-y to ₹175 crore. Asset quality improved with GNPA/NNPA at 2.43/0.84 per cent, PCR at 79.8 per cent and credit cost at 26 bps. The Management expects NIM to increase from Q2 onwards as higher-yield mortgages and agri products take a larger share of sourcing, with further cost-of-deposit reduction — realistically ~7–8 bps per quarter versus the 14 bps achieved in Q1.Operating efficiency remained strong with cost-to-average assets at a record-low 2.42 per cent, resulting in ROA/ROE of 0.96/13.61 per cent. CRAR stood at 17.03 per cent, providing adequate growth capital.The management expected GNPA below 2.50 per cent and NNPA below 1.00 per cent and business-model credit cost of 45-55 bps of average assets and a margin of safety of 3–4x (Q1 at 6.03xcost-to-average-assets of 2.50-2.60 per cent (Q1 at 2.42 per cent) and cost-to-income of 60 per cent or below.We maintain a Buy rating with a Target Price of ₹216, valuing the bank at 0.9x FY28E P/BV.Published on July 27, 2026