Neutral Bandhan Bank; target of Rs 170: Motilal Oswal

Motilal Oswal's research report on Bandhan Bank

Bandhan Bank (BANDHAN) reported 4QFY25 PAT of INR3.2b (up 480% YoY), 29% below our estimate due to lower other income and higher provisions. NII declined 4% YoY/3% QoQ to INR27.6b (in line). Margins contracted 21bp QoQ to 6.7% due to a change in the product mix toward secured advances and higher slippages/interest reversals.  Opex grew 9.4% YoY to INR18.8b (in line). C/I ratio thus rose to 54.5%. Net advances grew 9% YoY/4% QoQ, while deposits grew 12% YoY/7.2% QoQ. CASA mix stood at 31.4%. CD ratio improved to 87%. GNPA ratio increased 3bp QoQ to 4.7%, while NNPA stood flat at 1.3%. Slippages increased to INR17.5b vs. INR16.2b in 3QFY25 due to continued stress in MFI. SMA book declined 50bp QoQ to 3.3%.

Outlook

We cut our earnings estimates by 10%/7% for FY26/FY27 and expect FY27E RoA/RoE of 1.7%/14.3%. Reiterate Neutral with a TP of INR170 (1.0x FY27E ABV).