Neutral on Bandhan Bank, target price Rs 370: Motilal Oswal

Motilal Oswal has neutral call on Bandhan Bank with a target price of Rs 370. The current market price of Bandhan Bank Ltd. is Rs 332.45.

Bandhan Bank Ltd., incorporated in the year 2014, is a banking company (having a market cap of Rs 54132.92 Crore).

Financials
For the quarter ended 31-12-2020, the company reported a Standalone Total Income of Rs 3861.12 Crore, up 7.87 % from last quarter Total Income of Rs 3579.39 Crore and up 25.55 % from last year same quarter Total Income of Rs 3075.34 Crore. The bank reported net profit after tax of Rs 632.59 Crore in latest quarter.

Investment Rationale
BANDHAN has reported strong improvements in collection efficiency despite ongoing macro challenges and election-related uncertainties. On the business front, it reported healthy loan growth, supported by the underlying recovery trends, and is well placed to better its growth trajectory. The bank continues to demonstrate strong traction in liability accretion led by CASA, with the mix improving to ~43.4% in total deposits. With rising COVID-19 cases and fears of another lockdown the brokerage remains watchful on the asset quality of MFI players. However, BANDHAN has limited exposure to key COVID-19 impacted states (it has only 5% of its branches and 4% of DSCs in Maharashtra). The brokerage maintains Neutral rating with TP of INR 370 per share (2.4x FY23E BV).

Promoter/FII Holdings
Promoters held 40 per cent stake in the company as of Sept 30, 2020, while FIIs held 32.2 per cent, DIIs 12.7 per cent and public and others 15.1 per cent.