Shares of Bandhan Bank jumped over 4 percent in the morning session on January 23 after global research firms gave the 'buy' rating on the stock with up to 42 percent upside.
At 9:40am, Bandhan Bank was quoting at Rs 248.00, up Rs 10.95, or 4.62 percent, on the BSE. It has touched an intraday high of Rs 249 and an intraday low of Rs 239.85.
Bandhan Bank on January 20 posted a 66 percent drop in its net profit for the December quarter (Q3FY23) at Rs 290.57 crore because of a sharp spike in provisions and total costs. The lender had logged in Rs 858.97-crore profit in a year ago. Its total expenditure rose 34.65 percent from last year to Rs 2,918.77 crore. Provisions and contingencies jumped 91.32 percent to Rs 1,541.49 crore versus Rs 805.71 crore on-year.
Net Interest Income (NII) or the income a bank earns by giving loans, fell marginally by 2.1 percent YoY to Rs 2,080.43 crore. Other income increased nearly 45.74 percent YoY to Rs 1,033.30 crore.
The lender's non-performing assets improved. Gross non-performing assets (GNPAs) fell 26.23 percent to Rs 6,964.76 crore as against Rs 9,441.57 crore logged in the same quarter of the previous year.
Global research firm JP Morgan has an 'overweight' rating on the stock with target at Rs 350 per share, an upside of over 42 percent from the current market price. The brokerage firm believes that Q3 numbers were in-line while the key positive was sharp moderation in slippages outside watchlist.
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"Over 90 percent of slippages were flows from stress book where bank has high coverage. Overall MFI stress book was lower than guided in December 2022 analyst meet. The bank's collection efficiency has largely moved back to pre-Covid levels.
CLSA has a 'buy' call on the stock with target at Rs 320 per share. The brokerage firm is of the view that NII missed estimates and overall performance was muted while SMA book and un-provided stress were down.
"MFI asset quality will be back on track in Q4 leading to a normalised Return on equity (RoE). We have cut FY24-25 estimates by 4-6 percent to factor in slower balance sheet growth while confidence in a cyclical MFI recovery increases," it said.
Jefferies also has a 'buy' rating on Bandhan Bank with target at Rs 340 per share. The global research firm is of the view that Q3 was tad better with profit, while slippages and credit costs were key drags. It expects normalisation of credit costs to drive rebound in earnings/RoE.
"Lending rate hikes can lift NIMs in H2 and could see sustainable improvement in CASA growth. Valuations are attractive and can re-rate as RoE reverts to 20 percent," Jefferies said.
With agency inputs
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