Neutral Bandhan Bank; target of Rs 240: Motilal Oswal

Motilal Oswal recommended Neutral rating on Bandhan Bank with a target price of Rs 240 in its research report dated July 16, 2023.

Broker Research

July 17, 2023 / 12:20 IST

Neutral

live

bselive
nselive

Volume

Todays L/H

Motilal Oswal's research report on Bandhan Bank

Bandhan Bank (BANDHAN) reported a weak quarter with a 19% YoY decline in PAT (13% miss) to INR7.2b, due to elevated slippages and sluggish NII growth, despite stable margins. Advances grew 8% YoY (down 6% QoQ) to INR982b, led by a strong 35% YoY (flat QoQ) growth in the non-MFI portfolio. The MFI book declined 12% YoY (down 10% QoQ) to INR513b in 1QFY24, thereby decreasing the MFI share in the total loan book to 50% from 60% in 1QFY23. CASA ratio moderated 330bp QoQ to ~36%. GNPA/NNPA ratios deteriorated by 190bp/100bp QoQ to 6.8%/2.2% primarily due to ECLGS covered advances being reclassified as NPA, hence PCR also declined 760bp QoQ to ~69.2%. Excluding NPA, CE declined 50bp QoQ to 98%, while SMA pool stood broadly unchanged at 5.5% (100bp QoQ decline in SMA-2 to 1.4%).

Outlook

We reduce our estimates for PAT/PPoP for FY24/FY25 by 5%/3% each. We estimate RoA/RoE to reach 2.3%/~20% in FY25 and reiterate our Neutral rating with a TP of INR240 (1.6x FY25E ABV).

For all recommendations report, click here