Bandhan Bank shares plunge after worse-than-expected Q3 show; what should investors do?

Bandhan Bank share price: Bandhan Bank shares faced heavy selling pressure on Monday, February 12, after the private sector lender reported a set of financial results that fell short of analysts’ expectations. The Bandhan Bank stock fell by as much as Rs 15.7, or 7.3 per cent, to Rs 200.6 apiece on BSE.

At 12:50 pm, the stock of Kolkata-headquartered Bandhan Bank was down 7.1 per cent at Rs 201 apiece on BSE, while the headline Nifty50 index was down 0.6 per cent. Eventually, Bandhan Bank's stock traded at Rs 200.65 apiece, down 7.21 per cent on the BSE today.

Minutes after the closing bell on Friday, Bandhan Bank reported a 2.5 times year-on-year jump in net profit to Rs 733 crore with 21.4 per cent growth in net interest income (NII), or the difference between interest earned and interest paid, to Rs 2,525.3 crore for the October-December period.

Its net interest margin (NIM), a key measure of profitability, remained steady on a sequential basis at 7.2 per cent for the fiscal third quarter, according to a regulatory filing.

According to Zee Business research, Bandhan Bank’s third-quarter net profit was estimated at Rs 770 crore, NII at Rs 2,540 crore and NIM at 7.1 per cent.

Bandhan Bank’s asset quality improved on a quarter-on-quarter basis. Its gross non-performing assets (GNPAs), or gross bad loans, were at 7.02 per cent and net non-performing assets (NNPAs), or net bad loans, at 2.21 per cent of total loans for the December quarter (Q3 FY24), as against 7.32 per cent and 2.32 per cent three months ago respectively, according to the filing. Read more on Bandhan Bank Q3 results 

What brokerages say about Bandhan Bank after the lender’s Q3 results

Macquarie

Macquarie maintained a 'neutral' call on Bandhan Bank, after the lender reported its quarterly numbers, with a target price of Rs 225 per share.

The bank's PAT missed the brokerage’s estimate due to lower other income and higher credit costs.

Bandhan Bank's asset quality continues to disappoint, and operating expense (opex) or average assets stood at 3.7 per cent, according to Morgan Stanley.

Nomura

Nomura maintained a 'buy' call on Bandhan Bank with a target of Rs 275 apiece for the stock.

The bank’s Q3 performance was soft from an operational perspective, according to Nomura, which lowered its FY24-26F EPS estimates for Bandhan Bank by 8-10 per cent.

"Slippages in MFI remain elevated; strong sequential loan growth. Lower NII and other income lead to the core-PPOP miss. Expect Bandhan Bank to deliver 15-17 per cent RoEs and 1.9-2.2 per cent RoAs over FY24-26F," the brokerage added.

Goldman Sachs and Jefferies each maintained a 'buy' call on Bandhan Bank with targets of Rs 274 and Rs 290 respectively.

CLSA has maintained an 'outperform' call on Bandhan Bank but lowered its target for the stock to Rs 250 per share from Rs 270 per share.

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