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Neutral Bandhan Bank; target of Rs 270: Motilal Oswal

Motilal Oswal recommended Neutral rating on Bandhan Bank with a target price of Rs 270 in its research report dated January 21, 2023.

January 23, 2023 / 03:34 PM IST
 
 
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Motilal Oswal's research report on Bandhan Bank

Bandhan Bank (BANDHAN) reported a muted 3QFY23 characterized by sluggish business growth, tepid NII and elevated provisions. Margin contracted 50bp QoQ to 6.5%, hit by interest income reversals. However, the bank expects margin to improve as Dec’22 margin was higher at 7.3%.  Advances grew 2% QoQ to INR921b even as the MFI portfolio declined 2%, supported by a healthy 14% QoQ growth in the non-MFI portfolio. Deposit growth was modest with CASA ratio witnessing a sharp decline.  GNPA/NNPA ratios remained stable at 7.2%/1.9%, respectively, with PCR at ~75% in 3QFY23. Slippages moderated to INR32.65b from NR39.54b in 2QFY23. Excluding NPA, CE improved to 98% from 95% in Sep’22, while SMA overdue in the MFI book dipped to 8.1% from 13.0% in 2QFY23.

Outlook

We continue to remain watchful of asset quality and the high SMA book, which can keep credit cost elevated. We thus estimate an RoA/RoE of 2.7%/22.4% in FY25 and maintain Neutral with a TP of INR270 (premised on 1.8x Sep’24E ABV).

For all recommendations report, click here

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Bandhan Bank - 22 -01-2023 - moti

Broker Research
first published: Jan 23, 2023 03:34 pm

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