Bandhan Bank shares drop 10.6% in two sessions; what should you do?
Bandhan Bank‘s shares experienced a decline of 7.40%, reaching ₹233.10 per share, in today’s trading session amid a strong spike in trading volumes. In the previous trading session, the stock tumbled by 3.49%, resulting in a cumulative drop of 10.65% over the two days. Analysts attribute this sharp fall in the banking shares to profit booking.
On January 4, the bank reported an 18.6% YoY and 7.7% QoQ improvement in loans and advances, reaching ₹1,15,964 crore for the quarter ending December. The total deposits of the bank grew by 14.8% YoY to ₹1,17,422 crore in Q3 FY24. The Current Account and Savings Account (CASA) came in at ₹42,413 crore, marking a 14% increase from ₹37,212 crore.
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According to Atul Parakh, CEO of Bigul, “In the Q3FY24 provisional update, Bandhan Bank has shown growth in loans & advances and total deposits both sequentially and year-over-year. Its asset quality, which did not appear to be up to the mark before, is now being maintained at an appropriate level. Its collection efficiency is also good. The bank is progressing as per management’s expectations. Among short-term factors, there was a general market correction as both days (6th and 8th January 2024) saw a slight dip in the Indian stock market, impacting Bandhan Bank alongside other stocks. Following a recent rise in share price, some investors may have sold to secure profits, indicating profit booking and leading to a temporary downtrend.”
Meanwhile, global brokerage firm Jefferies maintained a ‘buy’ call on the stock with a target price of ₹254 apiece following the bank’s Q3 FY24 update. Despite a slightly soft collection efficiency (CE) in the non-MFI segment, the brokerage highlighted that the overall CE remained steady at 98%, exhibiting a flat year-on-year (YoY) and quarter-on-quarter (QoQ) trend.
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Q2FY24 Scorecard
For the September quarter (Q2FY24), the bank reported a net profit of ₹721 crore, driven by a decline in provisioning cost. This marked a significant improvement compared to the net profit of ₹209 crore reported in the corresponding quarter of the previous year. Bandhan Bank’s net interest income (NII) for the quarter came in at ₹2,443 crore, with a net interest margin (NIM) of 7.2%.
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Provisions (excluding tax) and contingencies decreased to ₹636 crore in Q2FY24 from ₹1,280 crore in the same quarter a year ago. The gross non-performing assets in Q2FY24 were reported at 7.3%, a slight increase from 7.19% in Q2FY23.
Subdued Performance
In CY23, Bandhan Bank stock delivered a modest gain of 3.05%, trailing behind the Nifty Bank index, which recorded a robust 12.34% return during the same period. Since its listing in 2018, the stock has shown a downward trend, currently standing 37.84% lower than its issue price of ₹375 per share.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 08 Jan 2024, 05:17 PM IST
