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Buy Bandhan Bank; target of Rs 500: Emkay Global Financial

Emkay Global Financial is bullish on Bandhan Bank has recommended buy rating on the stock with a target price of Rs 500 in its research report dated April 13, 2021.

April 14, 2021 / 03:36 PM IST
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Emkay Global Financial's report on Bandhan Bank

Bandhan Bank has reported better-than-expected AUM growth of 21% yoy/8% qoq to Rs802bn (provisional) on a high base, primarily driven by better disbursement trends in MFI, small business loans and mortgages, in our view. Q4 is seasonally a strong quarter for lenders with a sizeable MFI portfolio. Creditaccess (18% yoy/14% qoq), Ujjivan (7% yoy/11% qoq) and Satin Creditcare (1% yoy/5% qoq) too have reported healthy growth, as per their business updates. Deposits growth remained strong at 37% yoy/10% qoq to Rs780bn (a phenomenon seen across banks), given the bank's strong liability franchise. CASA ratio improved by 50bps qoq/660bps yoy to 43.4%. Deposits are now 90% of AUM vs. 79% in Q4FY20, leading to lower CoF and thus being structurally long-term positive for NIMs.


We like Bandhan's strategy to diversify the asset portfolio away from MFI (product as well as geography-wise) in the wake of rising adverse asset quality events while creating strong provisioning/capital buffers. After the recent correction, the stock is trading at reasonable valuations of 2x FY23 ABV. Currently, we have a Buy rating on the stock.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Apr 14, 2021 03:36 pm

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