ICICI Direct is bullish on Bandhan Bank has recommended buy rating on the stock with a target price of Rs 725 in its research report dated May 03, 2019.
ICICI Direct's research report on Bandhan Bank
Bandhan Bank reported 63.9% YoY growth in PPP led by strong growth in NII & other income. NII came in at Rs 1257 crore, up 45.6% YoY, led by strong AUM growth of 38.5%YoY and ~140 bps YoY improvement in margins. Higher revenue from processing fees & PSLC led to 90.7% YoY growth in other income to Rs 388 crore. Post higher provisions in Q3FY19 of Rs 378 crore in lieu of IL&FS, provision normalised with credit cost at ~39 bps in Q4FY19. Accordingly, PAT came in at Rs 651 crore, up 68% YoY, above our estimate of Rs 560 crore.
Given the pace of business growth, we revise our target price to Rs 725 per share (earlier Rs 575 per share), valuing the stock at 30x FY21E EPS of merged entity (Rs 24. 5 per share). Hence, we maintain our BUY recommendation on the stock.
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