Bandhan Bank falls 8% on receiving Rs 801 crore bid to sell bad assets

Shares of private lender Bandhan Bank fell nearly 8% to Rs 224.4 in Thursday’s intraday trade after the company said that it has received a binding bid of Rs 801 crore from an asset reconstruction company (ARC) for the written-off portfolio with an outstanding of Rs 8,897 crore.

“The bank shall go for bidding as per Swiss challenge method and decision of sale shall be taken as per extant guidelines governing Swiss challenge method and the relevant policy of the bank,” the bank said in a BSE filing.

At 11.02 am, the scrip was trading 7.6% lower at Rs 224.6 over its last day’s closing price of Rs 243 apiece. The stock has also fallen nearly 20% in the last six months, while it has plunged about 10% year-to-date.

Brokerage firm Jefferies has a buy call on Bandhan Bank with a target price of Rs 340, which implies an upside potential of 47% from the current market prices.

“Bandhan will sell Rs 8,900 crore of written-off loans (MFI) to ARC/ others for Rs 800 crore - 9% recovery. This is the second positive NPL-recovery event after Rs 920 crore received from CGFMU and another Rs 1,500-2,000 crore can be expected in 1HFY24. This improves asset quality outlook and values are attractive at 1.8x FY24 adj PB,” brokerage firm Jefferies said.

As per Trendlyne data, the highest target price for the stock goes up to Rs 390, while the average target price estimate is Rs 311, which shows an upside potential of 34% from the current market prices.

Out of the 21 analysts covering the stock, 14 have strong buy and buy ratings, six have hold ratings and one has a strong sell rating.

In Q2FY23, Bandhan Bank reported a net profit of Rs 209 crore as against a Rs 3,009 crore loss in the year-ago period. The bank made Rs 1,280 crore provisions in the September quarter against Rs 5,614 crore in the year-ago period. The net interest income also rose 13.3% to Rs 2,193 crore.

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