Tata AMC to raise stake in DCB Bank to 7.5%; stock jumps 8%

Shares of DCB Bank rallied nearly 8% in opening trade on Thursday after the private sector lender informed the exchanges that the Reserve Bank of India (RBI) has given a nod to Tata Asset Management Company (AMC) to increase its stake in the bank to 7.5%. Tata AMC to acquire the stake in DCB Bank through the schemes of Tata Mutual Fund.

“The bank has received an intimation from RBI on July 5, 2023, that it has granted its approval to Tata Asset Management Private Limited (TAMPL) to acquire aggregate holding of up to 7.5% of the paid-up equity capital of the Bank through the schemes of Tata Mutual Fund,” DCB Bank said in a BSE filing on July 5.

The approval to acquire an additional stake in DCB Bank is valid for one year from the date of the RBI letter (July 5), it added.

The central bank has also advised Tata AMC “to ensure that its aggregate shareholding in the bank shall not exceed 7.5% of the paid-up capital of the bank at all times”. Currently, Tata AMC through the schemes of Tata Mutual Fund, holds 4.95% stake in the bank, as per the exchange data.  

Reacting to the news, shares of DCB Bank gained as much as 8% to ₹131.15 on the BSE, while the market capitalisation climbed to ₹4,000 crore. The banking stock opened at ₹129.65, up 6.75% against the previous closing price of ₹121.45, while 1.6 lakh shares changed hands over the counter in the early trade so far compared with a two-week average volume of 1.05 scrips.

DCB share price touched a 52-week high of ₹141.20 on December 13, 2022, and a 52-week low of ₹77.05 on July 6, 2022. The counter has delivered 63% returns in the last one year, but it has given flat returns in the past six months. In the last one month, the share price of private lender has risen 7%, while it added 9% in a week.

Last month, DCB Bank implemented a new Direct Tax collection system on the government of India’s new income tax collection portal (TIN 2.0). This online facility will provide taxpayers with a convenient single platform for both tax payments and e-filing of tax returns. The process involves the benefit of instant payment acknowledgement and the issuance of a challan receipt, all without incurring any charges.

DCB Bank, a scheduled commercial bank regulated by the RBI, has 427 branches across India, as on March 31, 2023.

Domestic brokerage house Prabhudas Lilladher has recommended “buying and accumulating” the DCB shares for a target price of ₹142 while keeping the stop loss at ₹116. “The stock has witnessed a decent pullback from the significant 50EMA and 200 period MA of around 116 levels and has improved the bias to anticipate for further rise in the coming days. The RSI has also indicated a trend reversal showing strength to signal a buy and currently is well placed with much upside potential visible to carry on the momentum still further ahead,” the brokerage said in a note on July 4.

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