Accumulate Bandhan Bank; target of Rs 217: KR Choksey

KR Choksey recommended accumulate rating on Bandhan Bank with a target price of Rs 217 in its research report dated August 06, 2024.

Broker Research

August 07, 2024 / 12:31 IST

Accumulate

KR Choksey's research report on Bandhan Bank

Net Interest Income (NII) for Q1FY25 stood at INR 30,050 Mn, a growth of 20.7% YoY/ 4.8% QoQ. The NII was 2.2% better than our estimates, led by better-than-estimates. Pre-Provision Operating Profits (PPOP) grew by 24.4% YoY/ 5.6% YoY to INR 19,409 Mn. PPOP was higher than our estimates, driven by higher operating income. The net profit for Q1FY25 stood at INR 10,635 Mn, a growth of 47.5% YoY, primarily led by lower provisions. The net profit was a beat compared to our estimates due to significantly lower provisions during the quarter. We adjust our EPS estimates upward by 3.8% for FY25E and 1.7% for FY26E, based on slightly lower operating expenses and provisions compared to our previous estimates.

Outlook

We revise our target price to INR 217 per share (earlier INR 193) by assigning a P/ABV multiple of 1.3x to the adjusted book value of INR 155 per share for FY26E, implying an upside of 7.4% over the CMP. The stock price has fallen over the last week hence we upgrade our rating to ACCUMULATE from HOLD. We continue to remain cautious about the ambiguities surrounding the succession process and the banking strategies.

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