Neutral Bandhan Bank; target of Rs 370: Motilal Oswal
Motilal Oswal recommended Neutral rating on Bandhan Bank with a target price of Rs 370 in its research report dated January 21, 2021.
February 02, 2021 / 09:11 PM IST
Motilal Oswal's research report on Bandhan Bank
BANDHAN reported a weak quarter, with net earnings falling sharply below estimates, affected by provisions of INR10b predominantly towards rising asset quality concernsin the Assam portfolio. However, operating performance remains strong, led by higher NII as margin improved 30bp QoQ, while AUMs grew at 23% YoY. Liability traction was robust at 30% YoY. n On the asset quality front, the pro-forma GNPA/NNPA ratio increased to ~7.1%/2.36%, with 0dpd of ~76.5%. Collection efficiency in Assam dropped by 1,000bp to 78% during 1-16 Jan’21. We raise our credit cost estimate for FY21E/FY22E to 4.4%/2.6% and downgrade our rating to Neutral.
We downgrade our rating to Neutral on rising asset quality concerns and revise our TP to INR370/share (2.5x Sep’22E BV).
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