Q4 was better than expected for Bandhan Bank, given the challenges the MFI segment was faced with. Though slippages were higher than in the prior quarter in the overall book incl. the EEB book, the decrease in the SMA book was positive, indicating lower incremental stress build-up. Given that the bank has been recognizing stress in its EEB book for 17 quarters now, we expect further stress to be lower than that in the industry.
OutlookThe bank is expected to generate a ~1.5% RoA in the medium term. We retain a Buy at a 12-mth TP of Rs 207, 1.1x P/ABV on its FY27e book.
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