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Neutral Bandhan Bank; target of Rs 315: Motilal Oswal

Motilal Oswal recommended Neutral rating on Bandhan Bank with a target price of Rs 315 in its research report dated June 29, 2022.

June 29, 2022 / 04:38 PM IST

Motilal Oswal's research report on Bandhan Bank


Bandhan stock has corrected sharply in recent days owing to concerns over its Assam portfolio as 85-90% of total districts in the state have been affected by severe floods. As Assam constitutes ~9% of MFI loans and ~8% of total banking units for BANDHAN, the ongoing flood situation will affect collection trends over the near term. Its SMA book for Assam and West Bengal stands at 8.5%/8.2% (v/s 46.4%/41.3% in 1QFY22), with restructured assets of INR54.2b (5.8% of loans). We expect the stress dissolution rate to now moderate. Our PAT and ABV projections have witnessed sharp swings of -24% to 22% over the past five quarters. We remain watchful of the near-term impact, though the stock trades at reasonable valuations of 1.7x FY24E P/BV against its average FY23-24E RoE of 24%. We maintain our Neutral rating with a revised TP of INR315 pershare (2x FY24E P/BV).


Outlook


We remain watchful about the near-term impact, though the stock has corrected sharply by ~20%/15% since its 4QFY22 result/past 3 weeks and trades at reasonable valuations of 1.7x FY24E P/BV against its average FY23-24E RoE of 24%. We maintain our Neutral rating with a revised TP of INR315 (2x FY24E P/BV) and will review our estimates after its 1QFY23 result.


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At 16:01 hrs Bandhan Bank was quoting at Rs 268.25, down Rs 8.20, or 2.97 percent.

It has touched an intraday high of Rs 274.70 and an intraday low of Rs 264.00.

It was trading with volumes of 371,399 shares, compared to its thirty day average of 218,854 shares, an increase of 69.70 percent.

In the previous trading session, the share closed down 2.50 percent or Rs 7.10 at Rs 276.45.

The share touched its 52-week high Rs 354.10 and 52-week low Rs 229.65 on 28 June, 2021 and 27 December, 2021, respectively.

Currently, it is trading 24.24 percent below its 52-week high and 16.81 percent above its 52-week low.

Market capitalisation stands at Rs 43,209.34 crore.

For all recommendations report, click here


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first published: Jun 29, 2022 04:37 pm
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