Neutral on Bandhan Bank, target price Rs 375: Motilal Oswal

Motilal Oswal has neutral call on with a target price of Rs 375. The current market price of Bandhan Bank Ltd. is Rs 346.9. Time period given by analyst is one year when Bandhan Bank Ltd. price can reach defined target.

Bandhan Bank Ltd., incorporated in the year 2014, is a banking company (having a market cap of Rs 55839.47 Crore).

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 3787.91 Crore, down -1.90 % from last quarter Total Income of Rs 3861.12 Crore and up 13.19 % from last year same quarter Total Income of Rs 3346.47 Crore. The bank reported net profit after tax of Rs 103.03 Crore in latest quarter.

Investment Rationale
The brokerage believes that risks to MFI lenders are receding at the margin even as near term earnings/asset quality pressure may continue, also as the implementation of these schemes will take some time. The double bonanza of MFI package from Assam state government and the central government relief measures for the MFI sector will enable faster turnaround in asset quality / earnings trajectory. The brokerage is turning more sanguine on asset quality over 2HFY22 though remain watchful on collection efficiency in the near term, mainly in key state of West Bengal (~45% of MFI portfolio). It thus increases PT to INR375 (from INR335) based on 2.5x FY23E ABV though it maintains NEUTRAL rating as it awaits more clarity around implementation of these schemes

Promoter/FII Holdings
Promoters held 40 per cent stake in the company as of March 31, 2021, while FIIs held 34.9 per cent, DIIs 1.9 per cent and public and others 23.2 per cent.