DCB Bank has recently been upgraded to a ‘buy’ rating by Motilal Oswal (MOSL), with a target price that suggests over a 23% upside for the stock. This upgrade comes after a period of strong performance by the bank, with a focus on improving loan growth and operating leverage.

MOSL had previously downgraded DCB Bank to a ‘neutral’ rating in July 2019 due to concerns about the bank’s operating performance and growth outlook. However, with improvements in loan growth and operating leverage expected, MOSL now sees potential for a 21% earnings growth rate over the next few years.

One of the key factors driving this upgrade is the bank’s focus on maintaining healthy net interest margins (NIMs) and reducing its exposure to low-margin corporate loans. This, along with a strategic shift towards retail and business loans, is expected to support revenue growth and profitability.

In addition to these factors, MOSL also highlights the bank’s plans for branch expansion and digital enhancements to improve customer experience and drive business growth. With a focus on increasing the retail mix and enhancing branch productivity, DCB Bank aims to double its balance sheet size over the next few years.

Despite challenges faced during the COVID pandemic, DCB Bank has been working on improving its asset quality by emphasizing secured and diversified loans. This, along with streamlined credit processes, is expected to lead to a further improvement in asset quality and a reduction in non-performing assets.

Overall, MOSL is optimistic about DCB Bank’s prospects and expects the bank to sustain healthy growth rates in the coming years. With a positive outlook on loan growth, NIMs, operating leverage, and asset quality, the brokerage believes that the bank is well-positioned for future success.

Investors are advised to consider these factors and consult with financial experts before making any investment decisions based on this information.