Hold Bandhan Bank; target of Rs 528: Arihant Capital
Arihant Capital recommended hold rating on Bandhan Bank with a target price of Rs 528 in its research report dated July 22, 2019.
July 23, 2019 / 01:21 PM IST
Arihant Capital's research report on Bandhan Bank
Bandhan Bank started financial year FY20 with an impressive set of numbers surpassing our estimates on all fronts. PAT grew by 46% yoy to Rs 701 cr vs. our estimate of Rs 591 cr, led by strong credit growth, stable margins and controlled cost. Loans (on book + off book) surged by 39% yoy while micro loans grew by 40%. Non-micro assets growth was at 36% yoy. Liabilities of the bank are gaining more traction with a deposit growth of 42% YoY. CASA ratio increased to 36.1% from 35.5% YoY, retail deposits to total deposits stood at 76.1%. Margins improved further from 10.3% to 10.5% YoY led by improvement in yields. Asset quality of the bank was stable with a GNPA at 2% flat QoQ. Maintain Hold with a revised target price of Rs 528, giving an upside potential of 5%.
However, the rich valuations (4.6x FY20E & 3.8x FY21E ABV) coupled with the overhang pertaining to the reduction of promoter holding offer limited room for upside at current level. We maintain our Hold rating with a revised TP of 528 based on 4x P/ABV to its FY21E.
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