Bandhan Bank Ltd: Share Target Price and Investment Considerations

Recently, Bandhan Bank’s share price has fallen to its 52-week low and is currently trading around ₹172-₹174.
Bandhan Bank’s share price was ₹260 at the beginning of this year, in the first week of January 2024. The highest level in the last 52 weeks is ₹272.

Talking about the historical share price movement of Bandhan Bank, on 01.08.2018, the share price was at a Lifetime High of ₹740; after that, the price started to decline, and during the COVID period, the price fell sharply to its all-time low of ₹152. Since then, the share price has tried to move upwards but has again been unable to reach the all-time highs. And the share price is still falling.

Currently, Bandhan Bank’s share price is trading at a 52-week low, i.e.₹172. The reason behind the fall in prices is that Bandhan Bank MD and CEO Chandra Shekhar Ghosh recently announced his retirement and the news is said to be impacting the share price.

In this regard, most financial institutions have predicted that the price of bank shares will remain between ₹160 and ₹180, but at present, there is little chance of an increase in the price.

However, if you are going to invest in Bandhan Bank shares for a minimum of 5 to a maximum of 10 years, bank shares can give a good return.

About Bandhan Bank Ltd.

Bandhan Bank started operations on August 23, 2015, it was the first instance of a microfinance entity transforming into a universal bank in India. On the day of launch itself, Bandhan Bank started with 2,523 banking outlets.

It offers a wide range of banking and financial services to individuals, micro and small enterprises, and corporate clients. The bank has a strong presence in both urban and rural areas of the country.

Bandhan Bank Ltd has shown consistent growth over the years and has become one of the leading banks in India. The bank’s focus on financial inclusion and its customer-centric approach has helped it build a strong customer base and gain market share.

Bandhan Bank Ltd Financials

Financial Metric	Mar 2019	Mar 2020	Mar 2021	Mar 2022	Mar 2023	TTM
Revenue (in Rs. Cr)	6,643	10,885	12,524	13,872	15,905	17,949
Interest (in Rs. Cr)	2,148	4,562	4,961	5,157	6,645	8,017
Expenses +	2,467	3,739	6,534	11,298	8,693	8,091
Financing Profit	2,028	2,584	1,029	-2,584	567	1,840
Financing Margin %	31%	24%	8%	-19%	4%	10%
Other Income +	1,063	1,549	2,022	2,822	2,469	2,100
Depreciation	78	80	103	110	143	0
Profit before tax	3,013	4,053	2,949	129	2,893	3,940
Tax %	35%	25%	25%	2%	24%	–
Net Profit +	1,952	3,024	2,205	126	2,195	2,983
EPS in Rs	16.36	18.78	13.69	0.78	13.62	18.53

Healthy recovery:
Bandhan Bank witnessed a healthy recovery in Q3FY24, wherein the loan book grew 20% YoY and deposits increased 15%, leading to NII growth of 21%. Despite a rise in deposit cost, the bank was able to maintain NIM (reported) at 7.2%, flat QoQ, aided by a rise in yield. The secured loan book stood at 44.4% of loans – on course to reaching the bank’s 50% target by FY26. Management is also targeting a cost-to-asset ratio of 3.5% vs. 3.6% guided for FY24, as most of the bank’s technological transformation is complete.
NIM guidance maintained:
The bank expects cost pressure to continue for another 1-2 quarters but believes higher yields would help it maintain NIM at current levels (target NIM of 7-7.5% for FY24). Other income declined 47% YoY in Q3 in the
absence of treasury gains. Factoring in higher costs and subdued other income, we lower our PPOP assumptions by 8%/5%/4% for FY24/FY25/FY26 while raising provision estimates, leading to a 13%/8%/7% cut in PAT.
Asset quality a key monitorable: Slippages stayed elevated at Rs 13.9bn vs. Rs 13.2bn in Q2 (~45% of Q3 slippages stemmed from system migration followed by the festive season). The bank sold Rs 7.2bn of housing loans to the ARC, lifting asset quality – GNPA/NNPA stood at 7%/2.2% in Q3 vs. 7.3%/2.3% in Q2. Management expects to see controlled slippages and improvement in the SMA book, along with recovery from the CGFMU and ECLGS portfolios. Credit cost guidance remains at 2% (+/-20bps) for FY24; we conservatively factor in 2.2% each for FY24/FY25/FY26.
Maintain BUY: Baking in gradual improvement in both operational costs and asset quality, along with stable margins, we forecast a PAT CAGR of 30% over FY23- FY26, albeit on a lower base, with ROA/ROE rising to 2.1%/17.3% in FY26. We roll valuations over to 1.6x FY26E ABV using the Gordon Growth Model (earlier 1.9x on FY25E), leading to a slightly revised TP of Rs 270 (earlier Rs 276). The recent stock price correction provides a further investment opportunity. Maintain BUY.

Before understanding the target of Bandhan Bank’s share price, we have to keep some things in mind. As we can see on the chart above, the share price has been continuously declining. Currently, the stock is trading around its lifetime low price. Before looking at the target, we have to see that the price has to settle above 152-153. We may see the stock trading at around the same price for a few days.
But if the stock remains stable above the price of ₹152. So we can move forward with the given targets for the future.

Bandhan Bank’s share target price, note that the first 2 targets are expected within a month or two. whereas next targets are expected within one to three years.