1. At a Glance
Dhanlaxmi Bank—yes, the one founded when radios were still cool—just posted a Q1 FY26 net profit of ₹12.18 Cr and continues to flex a Capital Adequacy Ratio of 18.26%. Not bad for a small-cap private sector bank that’s seen more U-turns than a Bangalore traffic jam.
2. Introduction with Hook
Imagine a 1927 vintage Ambassador car getting a turbocharged engine in 2025. That’s Dhanlaxmi Bank. Once gasping under NPA fumes and public apathy, the bank seems to be quietly slipping into a slow-motion turnaround.
- Q1 FY26 Net Profit: ₹12.18 Cr (YoY growth: 252%)
- Gross NPAs now at 3.22%, down from 6.35% in Jun ’22
Its name may scream “Laxmi,” but the journey’s been more “Dhan-less” for decades. Until now?
3. Business Model (WTF Do They Even Do?)
Let’s break it down:
- Type: Old-school private sector bank (non-promoter led)
- Presence: ~261 branches, ~282 ATMs, ~17 BCs
- Geography:
- Kerala: ~58%
- Tamil Nadu: ~14%
- Maharashtra: ~7%
- Karnataka: ~5%
- Rest of India: ~16%
Business Mix:
- Primarily retail deposits + SME lending
- No flashy fintech apps or BNPL nonsense. Just hardcore brick & mortar + fixed deposits.
The vibe: traditional, conservative, slowly digitizing. Basically your grandma’s bank trying to get on Instagram.
4. Financials Overview
| Metric | Q1 FY25 | Q1 FY26 | YoY Growth |
|---|---|---|---|
| Total Income | ₹306 Cr | ₹368 Cr | +20.25% |
| Net Interest Income | ₹100 Cr (est) | ₹139 Cr (est) | +39% |
| Net Profit | ₹3.46 Cr | ₹12.18 Cr | +252% |
| Gross NPA | 3.53% | 3.22% | Improving |
| Net NPA | 0.86% | 1.13% | Stable-ish |
Q1 shows an actual growth story that isn’t powered by PSU bailouts or HDFC’s ghost.
5. Valuation
- Price: ₹29.1
- TTM EPS: ₹2.19
- P/E: 13.2x
- Book Value: ₹35.4 → P/BV: 0.82x
Fair Value Range:
| Method | Valuation Range (₹) |
|---|---|
| P/BV Fair Value (0.9x–1.1x) | ₹32 – ₹39 |
| EPS-based (13x–18x) | ₹28 – ₹39 |
| Re-rating (if NPAs improve) | ₹35 – ₹42 |
CMP: ₹29 → Fairly valued with upside IF turnaround sustains.
6. What’s Cooking – News, Triggers, Drama
- Q1 PAT +252% — not a joke, this is real cash, not deferred tax credit.
- Capital Adequacy 18.26% — higher than many mid-sized banks.
- Deposits now ₹16,570 Cr — YoY growth ~15.8%
- NPA Clean-up: Gross NPA down from 6.35% to 3.22% in 2 years.
- FIIs waking up: FIIs stake jumped from 6.95% to 15.52% in just two quarters.
So yes, drama-free for now. But this stock has a history of corporate tiffs and RBI whispers.
7. Balance Sheet
| Item | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | ₹253 Cr | ₹253 Cr | ₹395 Cr |
| Reserves | ₹708 Cr | ₹777 Cr | ₹1001 Cr |
| Deposits | ₹13,352 Cr | ₹14,290 Cr | ₹16,013 Cr |
| Borrowings | ₹492 Cr | ₹299 Cr | ₹200 Cr |
| Total Assets | ₹15,132 Cr | ₹15,962 Cr | ₹17,937 Cr |
Key Takeaways:
- Solid growth in deposits = healthy trust
- Borrowings dropping = less dependency on outside funding
- Equity base increased = possible fund infusion or conversion?
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Cash Flow |
|---|---|---|---|---|
| FY23 | ₹216 Cr | ₹-106 Cr | ₹0 Cr | ₹111 Cr |
| FY24 | ₹17 Cr | ₹111 Cr | ₹0 Cr | ₹128 Cr |
| FY25 | ₹-5 Cr | ₹-32 Cr | ₹142 Cr | ₹105 Cr |
Clean cash generation in FY23–24. FY25 had operational slip-ups, but financing saved the day (possible equity raise).
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 5% | 6% | 6% |
| Net NPA % | 1.25% | 0.99% | 1.13% |
| Gross NPA % | 4.05% | 2.98% | 3.22% |
| Capital Adequacy | 14% est | 16% | 18.26% |
Verdict:
Slight slippage in asset quality, but coverage is decent and capital buffer high. Not sexy yet, but also not an ICU case.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | Net Profit | EPS |
|---|---|---|---|
| FY23 | ₹1,071 Cr | ₹49 Cr | ₹1.25 |
| FY24 | ₹1,207 Cr | ₹58 Cr | ₹1.46 |
| FY25 | ₹1,320 Cr | ₹67 Cr | ₹1.69 |
| TTM | ₹1,382 Cr | ₹87 Cr | ₹2.19 |
Growth visible: Revenue steadily rising, profits stabilizing, NPAs dropping — finally breaking out of stagnation zone.
11. Peer Comparison
| Bank | P/E | P/BV | ROE (%) | Gross NPA (%) | MCap (Cr) |
|---|---|---|---|---|---|
| HDFC Bank | 21.7 | 2.93 | 14.45 | ~1.2% | ₹15.3L Cr |
| ICICI Bank | 19.8 | 3.35 | 17.97 | ~2% | ₹10.4L Cr |
| Yes Bank | 23.1 | 1.32 | 5.44 | 2.3% | ₹63K Cr |
| Dhanlaxmi Bank | 13.2 | 0.82 | 5.50 | 3.22% | ₹1,150 Cr |
TL;DR: Dhanlaxmi is a penny-sized tortoise surrounded by turbo-charged hares.
12. Miscellaneous – Shareholding, Promoters
| Category | Jun 2025 |
|---|---|
| FIIs | 15.52% |
| DIIs | 0.05% |
| Public | 84.43% |
| Promoters | NIL |
Interesting Observation:
- No identifiable promoter.
- Retail owns this stock like it’s the neighborhood chai shop.
- FIIs coming back strong after disappearing in 2023–24.
13. EduInvesting Verdict™
Dhanlaxmi Bank’s story is more “kaun banega turnaround” than “rocketship to ₹100.” But Q1 FY26 results show a real, solid, sustainable move forward.
- Why it works:
- Undervalued vs peers (0.82x BV)
- NPA levels down by 50% in 2 years
- Healthy capital adequacy
- EPS growth is not a one-quarter fluke
- What sucks:
- Still under regulatory radar occasionally
- No promoter means no anchor hand
- Retail-heavy = speculative moves possible
So yes, it’s an old bank with new shoes. Will it run? Only if management keeps its act together.
Metadata
– Written by EduInvesting Team | 21 July 2025
– Tags: Dhanlaxmi Bank, Q1 FY26 Results, Private Sector Bank, Kerala Banks, NPA Recovery, Turnaround Stock
