Motilal Oswal's research report on Bandhan Bank
Bandhan Bank (BANDHAN) reported a healthy 4QFY23, characterized by improving NII, declining provisions, and a superior asset quality. Margin improved 80bp QoQ to 7.3%, led by 14% QoQ growth in advances and lower slippages. Advances grew 11% YoY (14% QoQ) to INR1.05t, led by a healthy 16% QoQ growth in the non-MFI portfolio. The MFI book also showed a steady momentum with a QoQ growth of 7%, primarily focusing on diversifying the geographical mix. CASA ratio improved 291bp QoQ to ~39%. GNPA/NNPA ratios improved 228bp/69bp QoQ to 4.9%/1.2%, enabled by ARC sale, with PCR improving slightly to ~77%. Excluding NPA, CE improved 50bp QoQ to 98.5%, while SMAs in the MFI book dipped to 5.6% from 8.1% in 3QFY23.
We estimate RoA/RoE to recover to 2.5%/~21% in FY25. We reiterate our Neutral stance on the stock with a TP of INR265.
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