Bandhan Bank share price closed higher in trade today after brokerage Motilal Oswal initiated coverage on the stock with a buy call. Share price Bandhan Bank ended 6.02% or 24.10 points higher at Rs 424.50 compared to the previous close of Rs 400.40 on BSE. The large cap stock rose up to 6.13% to Rs 424.95 intra day on BSE.
It has lost 12.47% in last one year and fallen 16.45% since the beginning of this year.
On NSE, the stock closed 5.97% or 23.90 points higher at Rs 424.30 compared to the previous close of Rs 400.40. During the day, it hit an intra day high of 440.40.
Motilal Oswal said the stock offers great long-term opportunity post correction. It expects the bank to deliver industry leading return on asset/RoE of 3.7%/23.4% for FY22. Valuations appear reasonable, the brokerage added.
It initiated coverage for the bank with a target price of Rs 500 per share.
"The private sector lender has demonstrated a strong track record in growing its balance sheet/earnings and maintained a robust market share/cost leadership with its low-cost DSC network. It has also deftly handled external events like demonetisation/GST, wherein it restored the normal delinquency rate within three months," said Motilal Oswal.
The merger with GRUH has helped improve product diversification, reduce concentration risk and increase cross-sell opportunities (around 68 percent of GRUH's book has a ticket size of less than Rs 10 lakh), the brokerage added. Bandhan Bank stock which stood at Rs 469.80 on February 12 has corrected 9.68% since then as domestic indices have taken into account the rising effect of coronavirus on Indian economy.
The private sector lender reported a huge jump in net profit, including that of merged Gruh Finance, to Rs 731 crore for December 2019 quarter. Bandhan Bank had reported a post tax net of Rs 331.26 crore in the year ago period. However, the results were not comparable as the reported quarter includes the performance of gruh Finance, with which it merged in 2019.
The microlender-turned-universal bank had to set aside Rs 200 crore as loan loss provisions after evaluating risks for its portfolio from in the restive North Eastern India.
Over a tenth of the Kolkata-headquartered bank's overall book come from Assam, had witnessed a spate of protests by citizens over the passage of the amendments to Citizenship Act by both Houses of Parliament.