Shares of private sector lender DCB Bank Ltd. gained as much as 8 percent in trade on Thursday after the Reserve Bank of India (RBI) gave approval to the Tata Mutual Fund to increase its stake in the bank.
The central bank has granted its approval to Tata Asset Management Pvt. Ltd to acquire aggregate holding of up to 7.5 percent of the paid-up equity capital of DCB Bank through the schemes of Tata Mutual Fund.
The approval is valid for a period of one year from the date of the RBI letter. Tata Asset Management has also been advised by RBI to ensure that its aggregate shareholding in the bank shall not exceed 7.5 percent of the paid-up capital of the bank at any time.
Currently, Tata MF holds a 4.95 percent stake in DCB Bank.
On Wednesday, Axis Securities was bullish on DCB Bank and recommended a ‘Buy’ rating on the stock with a target price of Rs 150 per share.
In its research report dated July 5, Axis securities said that the improved demand outlook and the management’s guidance of doubling the balance sheet size in the next 3-4 years should keep DCB Bank’s credit/deposit book healthy at around 18/17 percent CAGR (compounded annual growth rate) over financial year 2023-2025.
During the March 2023 quarter, DCB Bank had posted a 25 percent increase in its net profit to Rs 142 crore, while total income during the period rose to Rs 608 crore from Rs 495 crore in the same period of the previous fiscal year, the bank said.
Shares of DCB Bank ended 5.5 percent higher at Rs 128.7. While the stock is flat year-to-date, it has risen over 60 percent during the last 12 months.
