Motilal Oswal's research report on Bandhan Bank
Bandhan Bank (BANDHAN) reported a 4% miss on profitability at INR7.2b, amid sluggish NII growth and broadly stable margins. Advances growth was moderate at 13% YoY/4% QoQ, driven by healthy growth in the non-MFI portfolio. MFI book, which declined in Q1, has now grown by 5% QoQ. The MFI share in the total loan book now stands at 50% with O/s book currently at ~INR540b. Deposits growth has been healthy at 13% YoY/3% QoQ. The CASA mix improved as the bank increased SA rates during the quarter to limit the migration from SA to term deposits. GNPA increased 57bp QoQ to 7.3%. This rise can be attributed to higher slippages; however, the SMA book decreased by 130bp QoQ to 4.2%. This reduction in the SMA book is expected to contribute to a decrease in slippage run-rate. Collection efficiency was steady at 98%.
Outlook
We reduce our FY24/25E PAT by 3%/5% and estimate FY25 RoA/RoE at 2.1%/18%. We reiterate our Neutral rating on the stock with a TP of INR250.
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