Moneycontrol
Last Updated : Oct 11, 2018 12:44 PM IST | Source: Moneycontrol.com

Bandhan Bank sinks 10% as Macquarie, JPMorgan cut target after Q2 earnings, IL&FS exposure

JPMorgan also cut its target price on Bandhan Bank to Rs 590 from Rs 670 given lower visibility on growth from FY20, while maintaining Neutral rating.

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Bandhan Bank share price plunged 10 percent intraday Thursday as global investment firms slashed target price for the stock after September quarter earnings.

Macquarie downgraded the private sector lender to to Neutral from Outperform and reduced target price to Rs 540 from Rs 560, citing valuations and uncertainties.

The reserch house prefers to await for better entry point.

It said bank's Q2 results were strong with robust operating parameters but there are some overhangs like resolution of promoter stake sale and market perceptions of loans given to IL&FS.

While addressing press conference, Chandrasekhar Ghosh, CEO and MD said the bank has an exposure of Rs 388.5 crore to IL&FS and the account is standard.

The fear may be that IL&FS had defaulted on several interest payments to bondholders, which raised liquidity concerns in the debt market and redemption pressure in few mutual fund houses. As a result, NBFCs fell sharply in last one month.

JPMorgan also cut its target price on Bandhan Bank to Rs 590 from Rs 670 given lower visibility on growth from FY20, while maintaining Neutral rating.

The research house said Q2 earnings met expectations and the loan growth was more modest. It believes bank is on track to meet estimate.

Bandhan Bank reported a healthy 47.4 percent growth in profit of July-September quarter to Rs 488 crore compared to a year-ago, driven by strong NII and operating income, and stable asset quality.

Net interest income shot up 55.6 percent year-on-year to Rs 1,078 crore in Q2 with strong improvement in net interest margin and massive growth in advances.

Bandhan Bank said advances (on book + off book) increased by 50.9 percent year-on-year to Rs 33,373 crore in September quarter while deposits growth was 29.6 percent to Rs 32,959 crore with retail deposit to total deposit at 81.6 percent.

Asset quality was largely stable in the quarter gone by. Gross non-performing assets as a percentage of gross advances inched up to 1.3 percent in Q2FY19 from 1.26 percent in previous quarter and net NPAs were higher at 0.7 percent against 0.6 percent quarter-on-quarter.

At 12:12 hours IST, the stock price was quoting at Rs 480.00, down Rs 32.05, or 6.26 percent on the BSE.
First Published on Oct 11, 2018 12:44 pm
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