Dhanlaxmi Bank at 9-yr high, hits 10% upper circuit; zooms 69% in two weeks

The stock of private sector lender was trading at its highest level since August 2014

Shares of Dhanlaxmi Bank (DBL) surged 10 per cent on BSE to hit the highest level in over nine years on Thursday. The stock was locked in the 10 per cent upper circuit at Rs 51.20, its highest level since August 2014.

There were only buyers on the counter and a combined 7.78 million equity shares changed hands with pending buy orders for 2.94 million shares on the NSE and BSE.

In the past two weeks, the stock has zoomed 69 per cent from a level of Rs 30.29 on January 11, 2024.

The Reserve Bank of India (RBI) on January 12 said it has imposed a penalty of Rs 1.20 crore on DBL for non-compliance with certain directions on 'Loans and Advances Statutory and Other Restrictions', KYC and certain norms related to interest rate on deposits.

RBI said that the action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the Bank with its customers.

DBL said that the said penalty has been imposed as a result of the non-compliance observed by RBI during the statutory inspection of the bank with reference to its financial position as on March 31, 2022 and has no impact on its financials, operation or other activities.

The business of the bank is largely concentrated in the state of Kerala which accounted for 58 per cent of the total branch network of 253 branches as on March 31, 2023.

Also, the southern states (Kerala, Tamil Nādu, Andhra Pradesh, Karnataka, and Telangana) contributed to around 79 per cent of the total branches.

During H1FY24 (April to September), the bank reported profit of Rs 51 crore as against loss of Rs 11 crore in H1FY23.

NIM declined from 3.35 per cent in H1FY23 to 3.20 per cent H1FY24.

Non-interest income (as a percentage of total assets) improved to 1.01 per cent during H1FY24 with treasury income and recovery from write-offs.

The operating expense (Opex) stood at 3.12 per cent in H1FY24 as against 2.93 per cent in H1FY23.

Credit cost improved from 0.59 per cent in H1FY23 to 0.33 per cent in H1FY24. Majorly with improvement in non-interest income, ROTA stood at 0.69 per cent in H1FY24 against loss in H1FY23.

Meanwhile, rating agency CARE Ratings believes that DBL will continue to benefit from the long track record of operations and shall sustain its moderate financial risk profile over the medium term.