How to trade Bandhan Bank shares after Q4 earnings? Here's what brokerages say

Bandhan Bank shares gained after the private sector lender reported a strong overall Q4FY23 performance on improved asset quality. Several top brokerages have maintained a 'Buy' call on the counter. Meanwhile, Bank of America has a 'Neutral' stance on it while HDFC Securities recommended an ‘Add’ .

Bandhan Bank shares were trading flat-to-positive at Rs 238.70 on the NSE at 10:35 am. The lender reported a net profit of Rs 808 crore for the quarter ended March 31, 2023, which plummeted nearly 58% year-on-year (YoY). Total income rose by a marginal 1% YoY to Rs 4,897 crore. Net Interest Income (NII), the difference between interest earned and interest expended, grew by nearly 19% sequentially to Rs 2,472 crore. Non-interest income declined by 39% quarter-on-quarter (QoQ) to Rs 629 crore for the quarter.

This is what top brokerages recommend:

Jefferies: Buy | Target: Rs 340
Jefferies has maintained a 'Buy' on the stock with a price target of Rs 340. Growth in loans and NII was weak for the reporting quarter, it said. However, the bank can improve profit aided by a fall in credit costs and improved credit quality and collections. NPL formation normalises down and should stay controlled next year, it said further.

BofA: Neutral | Target: Rs 280
BofA reiterates a 'Neutral' stance on the counter, adding that the stocks has potential for short-term upside but sustained re-rating might take longer. The bank has yet to see a fully normalised quarter. Bandhan Bank exhibited recovery in loan growth led by retail and commercial segments.

Kotak Institutional Equities: Buy | Target: Rs: 280
We maintain Buy with FV increased to Rs 280 from Rs 250 earlier. Bandhan Bank reported a strong overall performance led by solid improvement in asset quality metrics and focus is shifting back to growth. Early warning stress pool is declining sharply, suggesting that we should see a sharp reduction in credit costs for FY2024E. With lower credit costs, recovery in loan growth and expansion in return ratios, it is hard to disagree that Bandhan is perhaps best-positioned for a re-rating in our coverage universe.

Motilal Oswal: Neutral | Target: Rs 265
We thus estimate an RoA/RoE of 2.5%/21% in FY25 and reiterate our Neutral stance with a target price of Rs 265 (premised on 1.8X September 24E ABV). Bandhan reported a healthy 4QFY23, characterized by improving NII, declining provisions, and a superior asset quality. We continue to remain watchful of asset quality and the high SMA book, which can keep credit costs elevated.

JM Financial: Buy | Target: Rs 320
We expect Bandhan to deliver RoA/RoEs of 2.8%/22.2% based on a continued momentum in loan growth; diversification in the book; lower credit costs and granular liability base. We value the stock at 1.8X FY25e P/BV and maintain BUY with a revised target price of Rs 320.

HDFC Securities: Add | Target: Rs 270
Bandhan Bank’s portfolio diversification strategy remains on track (target of 50% secured book by FY26), however, we believe these sustained investments are likely to keep cost ratios elevated in the medium term. We tweak our FY24/FY25 forecasts by 6-8% to factor in better growth metrics and lower credit costs; maintain ADD with a revised TP of Rs 270 (1.8X March 2025 ABVPS).

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)