Bandhan Bank shares rise 9% after second-quarter earnings; here are new price targets

Shares of Bandhan Bank rose more than 9 percent today after the lender reported its second-quarter earnings. The banking stocks touched an intraday high of Rs 184.40, up 9.56 percent on the BSE. A total of 13.65 lakh shares of the company have changed hands, amounting to a turnover of Rs 24.70 crore. The bank’s market capitalization rose to Rs 29,440 crore on the BSE.

Bandhan Bank shares are trading above the 5-day moving averages, but lower than the 20-day, 50-day, 100-day and 200-day moving averages. The large cap stocks have lost 15 percent in a year and are down 25.13 percent since the beginning of this year.

Bandhan Bank reported a 30 percent year-on-year increase in net profit to Rs 937.4 crore in the second quarter, against Rs 721.2 crore in Q2FY24. Net interest income (NII) rose 21 per cent to Rs 2,948.2 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, up from 4.23% in the June 2024 quarter. Net NPAs stood at 1.29% in the second quarter, up from 1.15% quarter -on-quarter.

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

Nuvama said second-quarter earnings were better than those of peers. It has a neutral rating with a target price of Rs 190 for the stock.

‘Bandhan’s EEB book looks better than its peers, given the huge write-downs in recent years and early guardrails. However, the bank cannot remain insulated from MFI risks, only the pain will be smaller. Given the low visibility on MFIs, we continue to hold on ‘HOLD’ and reduce our price target to Rs 190 from Rs 200,” Nuvama said.

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

The broker said not only did profits beat expectations, but the quality of MFI loans held up well. The conservative cooling-off period, high share of unique borrowers, credit score gains and slower growth over two years have paid off, Jefferies said.

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

The broker said the lender reported steady performance in a tough environment. She is cautious because the outlook for the MFI sector is challenging. The bank posted healthy loan and deposit growth, but deterioration in asset quality due to higher slippages is a concern.

Kotak Institutional Equities has given a buy call on Bandhan Bank after its second quarter results. It has a price target of Rs 250 for the banking stock. The brokerage said earnings growth of 30% yoy was healthy, led by operating profit growth of 17% yoy and provisioning down about 5% yoy. Early warning indicators suggest that the banking portfolio could be resilient in this MFI cycle.