Hold Bandhan Bank Ltd For Target Rs.270 - ICICI Direct
![](https://portfolio.investmentguruindia.com/investmentguruimages/upload/post/2021/11/e0b0edbf9db09351bc4684b2c59709eb.jpg)
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Accelerated provision surprise; uncertainty lingering
About the stock: Bandhan Bank was incorporated in 2015 as RBI granted a universal banking license. The bank has a strong presence in eastern and northeastern India with MFI loans being its forte.
* Total 66% of loans are from emerging enterprise business (EEB)
* It has 1168 branches in 34 states, UTs and total customer base of 2.4 crore
Q2FY22 Results: Huge accelerated provisioning marred bottomline
* GNPA up 264 bps QoQ to 10.8%; restructuring at | 8326 crore (10.2% of book)
* Accelerated provision of | 4600 crore led to unexpected loss of | 3009 crore
* NII down 8.5% QoQ, NIMs contract 90 bps QoQ to 7.6%
* Loan growth at 6.6% YoY while deposits up 23.8% YoY
What should investors do?
Bandhan Bank has underperformed in the past year as challenges pertaining to asset quality have emerged with the micro loan segment being impacted the most.
* We retain our HOLD rating on the stock
* Target Price and Valuation: We value Bandhan Bank at ~2.5x FY23E ABV and revise down our target price to | 270 from | 310 earlier
Key triggers for future price performance:
* GNPA & restructured spiked; accelerated provision timing unclear
* Knocking off ~7% of advances in Q2 & improvement in collection to bring down credit cost in H2FY22E
* Management guides substantial recovery in H2; delivery key for re-rating
* Improvement in disbursement to support business off-take ahead
Alternate Stock Idea: Besides Bandhan, in our coverage we also like CSB Bank.
* CSB Bank has shown meaningful transformation in its overall performance in the past few years and currently has focus on gold and SME loans
* BUY with a target price of | 380
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
![](https://portfolio.investmentguruindia.com/uploads/news/insurance 123.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Axis Securities Ltd.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Wipro.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/2b1715f7e03b51b0ac9c014eb224fc1f.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/gdp22.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Geojit Financial Services.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Dollar retures 2.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/health22.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/Arvind Kapil, MD and CEO, Poonawalla Fincorp.jpg)
![](https://portfolio.investmentguruindia.com/uploads/news/stock8.jpg)