JM Financial is bullish on Bandhan Bank has recommended buy rating on the stock with a target price of Rs 650 in its research report dated October 10, 2018.
JM Financial's research report on Bandhan Bank
Bandhan Bank reported a strong quarter in 2QFY19, with net profit at INR 4.88bn (+47% YoY, 10% above JMFe). Gross AUM growth was robust (+51% YoY), while disbursement growth was at 71% YoY. Gross NPLs were largely stable at 1.3%, while total provisions were slightly elevated at 1.1%, despite marginal reduction in PCR (330bps decline QoQ to 47%). Bandhan disclosed that it has an exposure of INR 3.9bn to the IL&FS group (1.2% of AUM), which is currently classified as standard. Bank believes that the withdrawal of general permission to open branches by the RBI, does not materially impact balance sheet growth in the near term : a) Bandhan averages c. INR 350mn deposit per branch (vs 1.7bn , 1.4bn for HDFCB, KMB) b) Bank averages c.2700 MFI customers/DSC vs estimated capacity of c.3600.
Outlook
Notwithstanding the uncertainty regarding branch expansion, we continue to like Bandhan for its best-in-class return metrics and strong operating efficiencies. Maintain BUY with unchanged TP.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More