Bandhan Bank shares rise 9% on Q2 earnings; here are fresh price targets

Shares of Bandhan Bank rose over 9 per cent today after the lender reported its Q2 earnings. The banking stock touched an intraday high of Rs 184.40, rising 9.56 per cent on the BSE. A total of 13.65 lakh shares of the firm changed hands, amounting to a turnover of Rs 24.70 crore. Market cap of the bank rose to Rs 29,440 crore on the BSE.

Bandhan Bank shares trade higher than 5 day moving averages but lower than 20 day, 50 day, 100 day and 200 day moving averages. The large cap stock has lost 15 per cent in a year and fallen 25.13 per cent since the beginning of this year.

Bandhan Bank reported a 30 per cent year-on-year rise in net profit to Rs 937.4 crore in Q2 from Rs 721.2 crore in Q2FY24. Net interest income (NII) rose 21 per cent to Rs 2948.2 crore in the last quarter against Rs 2,443 crore in the corresponding quarter of the previous year.

Gross non-performing assets (GNPA) stood at 4.68% in the last quarter against 4.23% in the June 2024 quarter. Net NPAs came at 1.29% in Q2 against 1.15% quarter-on-quarter.

Gross NPAs  rose to Rs 6,105.3 crore against Rs 5,304.4 crore quarter-on-quarter, whereas net NPAs came at Rs 1,620.2 crore against Rs 1,396.4 crore quarter-on-quarter.

Nuvama said Q2 earnings were better than peers. It has a neutral rating with a price target of Rs 190 on the stock. 

"Bandhan’s EEB book looks better than peers given huge write-offs in the last few years and early guardrails. However, the bank cannot remain isolated from MFI risks, only that the pain will be lower. Given low visibility on MFI, we retain ‘HOLD’ and reduce our price target to Rs 190 from Rs 200," said Nuvama. 

Brokerage Jefferies has assigned a price target of Rs 240 with a buy call. 

The brokerage said profit not only beat estimates but quality of MFI loans has held-up well. Conservative cooling-off period, high share of unique borrowers, hike in credit-score & slower growth over 2 years have paid-off, said Jefferies. 

Nomura upgraded its stance to neutral with a price target of Rs 180. 

The brokerage said the lender reported a steady show in tough environment. It is cautious as MFI sector outlook is challenging. The bank logged healthy loan and deposits growth but asset quality deterioration on higher slippages is a concern. 

Kotak Institutional Equities has a buy call on Bandhan Bank post Q2 earnings. It has a price target of Rs 250 on the banking stock. The brokerage said 30% yoy earnings growth nwas healthy, led by 17% yoy operating profit growth and about 5% yoy decline in provisions. Early warning indicators suggest banking portfolio could be resilient in this MFI cycle.