Shares of Bandhan Bank surged over 9 percent to Rs 184 per share on October 28 after registering robust July-September quarter (Q2FY25) led by 30 percent on-year rise in net profit. Brokerages were impressed by the results and retained their 'buy' calls, seeing up to 36 percent upside potential.
Macquarie shared an 'outperform' call on Bandhan Bank and put out highest target price at Rs 250 per share. Given current valuations, analysts believe that the risk-reward appears favourable on account of growth and return-on-asset (RoA) trajectory.
Jefferies, too, retained their 'buy' rating on the private lender and shared target price at Rs 240 apiece. Analysts not only commended beat Q2 profit, but also quality of micro-finance loans. "The quality of MFI loans confirms our assessment that the company can outperform peers in this MFI cycle. The rise in slippages and overdues are manageable with limited earnings impact," they added.
ALSO READ: Bandhan Bank clocks 30% YoY growth in net profit, NPAs worsen QoQ
On the other hand, Nomura upgraded Bandhan Bank to 'neutral' and assigned target price at Rs 180 per share. The lender exhibited steady Q2 amid tough environment. The stock reflected benign valuations but challenging MFI sector outlook is cautionary.
Bandhan Bank reported 30 percent YoY surge in net profit to Rs 937 crore in Q2FY25, while net interest income (NII) increased by 21 percent YoY to Rs 2,948 crore. Meanwhile, the lender's net interest margin (NIM) improved slightly to 7.4 percent in the second quarter from 7.2 percent in the year-ago period.
The lender's deposit base showed healthy growth, with total deposits reaching Rs 1.4 lakh crore, up 27 percent YoY in Q2FY25. Gross advances also grew by 21 percent YoY to Rs 1.3 lakh crore in Q2FY25.
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