Dhanlaxmi Bank: Comprehensive Analysis 2025

Overview & History

Founded in 1927; headquartered in Thrissur, Kerala
Small-sized private sector bank with strong regional presence
Geographical mix:
- Kerala: ~58%
- Tamil Nadu: ~14%
- Maharashtra: ~7%
- Karnataka: ~5%
Network: 261 branches, 282 ATMs, 17 Business Correspondents
Presence across 14 states and 2 Union Territories (Mar 2025)

Business Growth Highlights (FY 2024–25)

Total business grew 14.31% YoY to ₹28,219 crore
Deposits increased 12.06% to ₹16,013 crore
CASA ratio stable at ~29%
Gross advances up 17.40% to ₹12,205 crore
Credit–Deposit ratio at 76.22%
Gold loan portfolio surged 31.88% to ₹4,447 crore (Q2 FY26)

Financial Performance Snapshot

Total Income: ₹1,489 crore (+9.53% YoY)
Net Interest Income: ₹483 crore (+5.4% YoY)
Operating Profit: ₹95 crore (+37% YoY)
Net Profit: ₹66.64 crore (+15% YoY)
ROE: ~4.78%
ROA: ~0.41%
Gross NPA: 2.98% (improved from 4.05%)
Net NPA: 0.99%

Capital & Asset Quality

Capital Adequacy Ratio (CRAR): 16.12% (Basel III)
CRAR improved further to ~17.81% as of Sept 2025
Provision Coverage Ratio: ~89%
Consistent reduction in NPAs indicates improving asset quality
No promoter share pledging

Valuation & Market Performance

Market Capitalisation: ~₹1,188 crore (Dec 2025)
Current Share Price: ~₹30
52-Week Range: ₹22 – ₹46
P/E Ratio: ~17.8x
P/B Ratio: ~0.96 (below book value)
Intrinsic Value (Median Model): ~₹13.32
Stock appears overvalued vs intrinsic estimates
1-Year performance underperformed banking sector (-16% to -29%)

Operational Segments & Loan Mix

Retail advances (ex-gold loans) grew 22% to ₹3,093 crore
Corporate advances increased 23% to ₹4,447 crore
MSME portfolio grew 10% to ₹1,872 crore
Housing and vehicle loans show steady traction
Gold loans remain a key growth engine (~32% YoY growth)

Risks & Challenges

Historically high NPAs, though improving
Low ROE and low interest coverage ratio
Contingent liabilities of ~₹974 crore
5-year sales growth modest at ~6%
Intense competition in private banking sector

Strategic Initiatives & Outlook

Strengthening retail and gold loan portfolios
Focus on asset quality improvement and capital buffers
Expansion of branch network and digital banking services
Cost optimisation and margin improvement focus
Net Interest Margin around ~3.33%

Conclusion: Balanced Opportunity with Caution

Dhanlaxmi Bank has shown steady improvement in business growth and asset quality, supported by strong regional presence and niche focus on gold loans.

However, valuation concerns, low profitability metrics, and historical asset quality risks warrant caution for new investors.

Investor View: Suitable as a long-term, high-risk banking play with careful monitoring of NPA trends, profitability, and capital adequacy.

Disclaimer: This analysis is for educational purposes only and does not constitute investment advice. Please consult a registered financial advisor before making investment decisions.