Buy Bandhan Bank; target of Rs 350: Motilal Oswal
Motilal Oswal is bullish on Bandhan Bank has recommended buy rating on the stock with a target price of Rs 350 in its research report dated May 12, 2020.
May 13, 2020 / 04:22 PM IST
Motilal Oswal 's research report on Bandhan Bank
Bandhan has created higher than the required provisions toward COVID-19, which affected earnings, even as NII/PPoP growth held strong. Also, business growth was steady despite lockdown imposed in the last few days of Mar’20. On the asset quality front, higher write-offs have aided GNPA improvement. Management indicated 78% of the portfolio remains in the Green zone, while only ~6% is in the Red zone. We remain watchful of asset quality and expect credit cost trends to remain elevated in the near term even though management commentary has provided comfort. Maintain Buy.
However, we remain cautious on asset quality in the MFI portfolio and expect an increase in delinquencies over the next few quarters. Thus, we build elevated credit cost at 2.5% for FY21E. We maintain our Buy rating, with an unchanged TP of INR350 (2.6x FY22E).
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