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Bandhan Bank has attracted positive attention from several brokerage houses following its robust performance in Q2, marked by significant profit growth and resilience in asset quality.
Jefferies initiated coverage with a “Buy” rating and a target price of ₹240. It noted a profit of ₹9 billion, reflecting a 30 per cent year-on-year increase that exceeded expectations. Jefferies highlighted the bank’s conservative cooling-off period, a high share of unique borrowers, and improved credit scores, which have collectively contributed to the quality of microfinance institution loans.
Macquariealso rated Bandhan Bank as “Outperform,” with a target price of ₹250. While the bank’s profit after tax missed estimates due to higher operational expenses, Macquarie pointed out that lower credit costs partly offset this. The firm remains focused on monitoring the bank’s stress pool, with management targeting credit costs of 1.8 per cent-2 per cent for FY25, and noted that the risk-reward profile appears favourable at a 1x FY26 price-to-book ratio valuation.
CLSA shared an “Outperform” rating with a target price of ₹240, emphasising that asset quality is better than anticipated. With slippages remaining stable, CLSA expressed confidence in the microfinance segment and noted the bank’s proactive recognition of stress compared to peers over FY23 and FY24.
Nomura upgraded Bandhan Bank to “Neutral” with a target price of ₹180, acknowledging a steady performance in a challenging environment. However, despite healthy loan and deposit growth, they remained cautious due to the overall outlook for the MFI sector.
Kotak Institutional Equities reiterated a “Buy” rating with a target price of ₹250. They pointed to a healthy 30 per cent year-on-year earnings growth, driven by a 17 per cent increase in operating profit and a decrease in provisions. They noted slippages of 3.5 per cent and credit costs at 2 per cent, suggesting that early warning indicators suggest the bank’s portfolio could show resilience during this MFI cycle.
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