Navigating the world of investment requires a keen eye for opportunities that promise long-term growth and stability. Dhanlaxmi Bank is an intriguing option for investors who want to be a part of the thriving banking industry.
This regional institution, deeply rooted in the South Indian market, has consistently navigated the complexities of the financial sector with remarkable resilience.
As Dhanlaxmi Bank releases its Q4 results for FY24, let’s look into the bank’s financial performance, assess its competitive positioning, and evaluate its strategies for future growth.
Also read: The best banks in India: Leading the way in finance
About Dhanlaxmi Bank
Located in Kerala, Dhanlaxmi Bank Ltd. has been serving customers in the South Indian region since its 1927 incorporation. The publicly traded bank offers a full suite of banking and financial services, including retail, corporate, and treasury banking.
Four main divisions within the bank contribute to the provision of services: retail banking, treasury operations, corporate wholesale banking, and other banking activity.
Dhanlaxmi Bank has been around for 96 years and today with 560 points of contact (including 261 branches, 282 ATMs, and 17 BCs) spread all over India, they serve tailoring services and personalising interactions.
Dhanlaxmi Bank Q4 results: Quarterly performance analysis
In the fourth quarter of the fiscal year 2023-2024, Dhanlaxmi Bank showcased a robust 11.5% year-over-year increase in total income, reaching ₹347.30 crore. This growth is complemented by a modest 1.13% rise compared to the previous quarter.
However, the bank’s net profit experienced a significant downturn, with a 91.33% decrease compared to the same period last year, settling at ₹3.31 crore. Despite this annual decline, the bank did see an 8.52% quarterly increase in net profits.
The net profit margin tells a similar story, with a sharp drop year-over-year, down to 0.95% from 12.25%. Yet, there’s a silver lining, as the bank managed a 6% quarterly uplift in its net profit margins.
Dhanlaxmi Bank’s financial journey through FY24 has been a rollercoaster. The first quarter started strong with sales at ₹289.14 crore and a healthy net profit of ₹28.30 crore, reflecting an EPS of ₹1.12.
However, the subsequent quarters showed a concerning trend. By the second quarter, sales had increased to ₹303.90 crore, but net profit dipped to ₹23.16 crore, and EPS fell to ₹0.92.
The third quarter saw a further drop in net profit to a mere ₹3.05 crore, with sales slightly up at ₹307.72 crore and EPS plummeting to ₹0.12. The final quarter stabilised in sales at ₹306.23 crore, with a slight uptick in net profit to ₹3.31 crore and EPS inching up to ₹0.13.
Here’s a quick overview of the quarters for FY24 mentioned above.
| CONSOLIDATED RESULTS | JUN ’23 – Q1 | Sept ‘23- Q2 | Dec ‘23- Q3 | Mar ‘24- Q4 |
| Sales (₹ cr.) | 289.14 | 303.90 | 307.72 | 306.23 |
| Net Profit (₹ Cr.) | 28.30 | 23.16 | 3.05 | 3.31 |
| EPS (₹) | 1.12 | 0.92 | 0.12 | 0.13 |
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Financial snapshot: FY24 growth over FY23
| Consolidated results | FY24 | vs. FY23 | % change |
| Revenue (₹ cr.) | 1,207 | 1,071 | +12.69 |
| Profit before tax (₹ cr.) | 70 | 49 | +42.85 |
| Net profit (₹ cr.) | 58 | 49 | +18.36 |
Dhanlaxmi Bank share price news
As of May 29, 2024, Dhanlaxmi Bank’s share is trading at ₹41.60 with a 52-week high
of ₹59.00 and a 52-week low of ₹16.35. According to the Dhanlaxmi Bank share price history, the share price has gone up 149.85% in the last 1 year and 120% in the past 5 years.
Current financials
| Metric | Value (as of May 29, 2024) |
| Market cap (₹ Cr.) | 1,053 |
| Book value (₹) | 38.0 |
| Dividend Yield | 0.00 % |
| ROCE | 5.53 % |
| ROE | 6.02 % |
| Stock PE | 18.2 |
Competitor information of Dhanlaxmi Bank
| Companies | P/E | Market cap(₹ crores) | ROE (%) | Net profit for the latest quarter(₹ crores) |
| HDFC Bank | 18.01 | 1153438.95 | 22.13 | 18012.87 |
| ICICI Bank | 17.81 | 788239.25 | 20.63 | 12200.05 |
| Axis Bank | 13.75 | 362573.75 | 20.33 | 7630.07 |
Also read: Fundamental Analysis of HDFC Bank Ltd.
Shareholding pattern of Dhanlaxmi Bank
The shareholding pattern (as of March 2024) of Dhanlaxmi Bank is as follows:
| Foreign Institutional Investors (FIIs) | 6.10% |
| Domestic Institutional Investors (DIIs) | 0.07% |
| Public | 93.82% |
Investing in Dhanlaxmi Bank
Pros
- Profit growth and business expansion:
Dhanlaxmi Bank has recorded a robust net profit of ₹57.82 crore for FY 2023-24, showcasing consistent growth. The bank’s total business has expanded by 6.39%, reaching ₹24,687 crore.
This metric signifies the company’s capability to draw customers and expand its operations. This also reflects the bank’s growing market presence, which could increase market share and long-term stability.
- Improving asset quality and fundamentals:
The reduction in Gross NPA and Net NPA demonstrates the bank’s commitment to managing risk and improving asset quality. Strong fundamentals, including an improved book value for FY 2023-24, and a capital adequacy ratio of 12.71%, indicate a robust financial position, which can attract investors looking for a stable investment.
- Affiliations and milestones:
Dhanlaxmi Bank’s affiliations with international banks, such as The Bank of New York Mellon and DBS Bank Limited, enhance its credibility. Recent milestones, such as opening new branches and introducing government agency business, indicate the bank’s proactive approach to growth.
Cons
- Net Profit Margin pressure:
Despite the increase in net profit, the bank has experienced a significant drop in net profit margin. This decline could be a cause for concern if it continues. A shrinking net profit margin may indicate rising costs or inefficiencies in the bank’s operations. Investors need to carefully analyse this trend to evaluate the bank’s ability to maintain profitability.
- Market competition:
The industry is fiercely competitive, with both public and private sector banks striving to capture the customer base. Dhanlaxmi Bank faces intense competition. In a competitive landscape, banks must innovate, adapt, and differentiate themselves.
Conclusion
Dhanlaxmi Bank’s fourth-quarter results have provided investors with a comprehensive view of the bank’s financial health, operational efficiency, and strategic direction.
By carefully evaluating the bank’s strategies, risk management practices, and competitive positioning, investors can make informed decisions and potentially benefit from the bank’s long-term prospects.
