DCB Bank Shares Slump 33% In 2 Trading Sessions On Expansion Plans

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Shares in Development Credit Bank (DCB Bank) have slumped a huge 33 per cent, after brokerages downgraded the stock following its results and plans to expand rapidly.

The shares of DCB were last trading at Rs 93.70 per cent, losing 12.85 per cent today, after the loss of 20 per cent seen on Thursday.

DCB Bank Shares Slump 33% In 2 Trading Sessions On Expansion Plans
Brokerages are worried that the bank which has planned to double its branch network by Dec 2016, could damage short to medium term prospects, due to erosion in profitability. The bank on the other hand has clarified that expansion becomes essential given the intensity of competition.

It maybe noted that the Reserve Bank of India recently granted licences to payment banks in the country.

The bank unlike some of its larger peers, may have to take on competition head-on to avoid losing market share.

Analysts see the Return On Equity (ROE) falling. Motilal Oswal has downgraded the stock to a sell, with a target price of Rs 90.

Kotak has also raised worries on the bank's expansion plan and had said that it was a "risky" move.

The bank which reported Q2 numbers saw its profits fall and also a slight increase in NPAs. Analysts feel that there could be a further downside risk to the stock in the coming days and it would be unwise to catch a falling knife.


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