Bandhan Bank, AU SFB, HDFC Bank: Target prices by Nomura post Q2 updates

Nomura India has released post-Q2 FY26 reports on Bandhan Bank, AU Small Finance Bank (AU SFB), and HDFC Bank. Nomura maintained a 'Neutral' rating on Bandhan Bank with a target price Rs 185; a 'Reduce' rating on AU SFB with a target of Rs 610; and a target price of Rs 1,095 for HDFC Bank with a 'Buy' rating, reflecting its strong performance.

For Bandhan Bank, gross loans grew 7.2 per cent YoY and 4.8 per cent QoQ, showing a healthy sequential pick-up. Deposit growth was steady at 10.9 per cent YoY and 2.1 per cent QoQ, with retail deposits up 16.7 per cent YoY/6.9 per cent QoQ, while bulk deposits declined 1.5 per cent YoY/8 per cent QoQ.

CASA deposits increased 5.6 per cent QoQ (down 6.5 per cent YoY), pushing the CASA ratio up 90 basis points QoQ to 28 per cent. Liquidity Coverage Ratio (LCR) as of 30 September 2025 was 152.7 per cent (against 178.3 per cent in June), and the loan-to-deposit ratio rose 230 basis points QoQ to 88.7 per cent. Collection efficiency in microfinance improved to 97.8 per cent, while overall collections increased marginally to 98.0 per cent.

Nomura highlighted NIMs and credit costs as key monitorables for Bandhan Bank for the quarter.

HDFC Bank reported gross AUM growth of 8.9 per cent YoY and 3.1 per cent QoQ. Net of loan sell-downs (IBPC), gross loans grew 9.9 per cent YoY and 4.4 per cent QoQ. Deposit growth was modest at 12.1 per cent YoY and 1.4 per cent QoQ, with CASA deposits up 7.4 per cent YoY/1.3 per cent QoQ and term deposits up 14.6 per cent YoY/1.4 per cent QoQ. The CASA ratio remained stable at 33.9 per cent.

AU SFB reported strong headline loan growth of 22.4 per cent YoY and 5.3 per cent QoQ, with AUM gross of securitized loans rising 17.0 per cent YoY and 4.5 per cent QoQ. Deposits grew 20.8 per cent YoY and 3.8 per cent QoQ, with CASA deposits increasing 9.7 per cent YoY/4.6 per cent QoQ, keeping the CASA ratio largely stable at 29.4 per cent (+24 basis points QoQ). The loan-to-deposit ratio rose 130 basis points QoQ to 88.7 per cent.

Nomura expects AU SFB’s near-term returns to remain subdued, projecting RoA of 1.3–1.5 per cent and RoE of 13–15 per cent over FY26–27F, and maintains a Reduce rating given the current valuation of 2.5 times FY27 book value per share.