Despite its slump through the the last few sessions, Bandhan Bank on Tuesday saw brokerage firm Jefferies India retaining the 'buy' tag on the stock and keeping the target price at Rs 430 a share.
The stock has been under pressure since the last seven sessions due to floods in Assam. It fell over 11 percent to hit a near three-month low on Monday and has lost 17 percent since June 9. Year to date, the lender is up 9 percent.
"The floods in Assam will have a near-term impact on Bandhan Bank's business and collections. While Assam is prone to such events, our conversations suggest this could impact the MFI business for the next 3-4 weeks, as 40 percent of the state has been materially affected by floods," Jefferies India said in a note to investors.
Assam forms 6 percent of total loans of the Bandhan Bank and 9% of emerging entrepreneurs business (EEB) loans. The brokerage firm expects 500 basis points higher credit costs in Assam would impact FY23 profit before tax by 5 percent. "We will watch out for the progress of further rains in the state," Jefferies said.
The flood situation in Assam deteriorated further with the death toll reaching to 81 and over 45 lakh people have been affected in 32 of the state's 34 districts. The water in five rivers - Brahmaputra, Kopili, Beki, Pagladiya, Puthimari - is flowing above the danger level at several places.