Buy Bandhan Bank, target price Rs 390: ICICI Securities

ICICI Securities has maintained a buy call on Bandhan Bank with a target price of Rs 390.

Bandhan Bank, incorporated in the year 2014, is a banking company (having a market cap of Rs 48,965.99 crore).

Investment Rationale
Assam govt, in its state budget of 2022-23, has earmarked Rs 25 billion towards Assam Microfinance Incentive & Relief Scheme. ICICI Securities believes this is additional budgetary support over and above Rs 16-17 billion disbursed to date in FY22 towards Category-1 customers out of the earlier allocation of Rs 20 billion.

Also, the progress of the scheme will be further reviewed through the course of this fiscal and any further financial assistance required will be provided through budgetary or nonbudgetary support.

Bandhan Bank has not considered Assam relief recovery benefit in its assumption of provisioning requirement. Q4 is seasonally a strong quarter for the bank.

The brokerage believes improved collection efficiency should curtail forward flow into slippages and moderate the EEB stress pool. Also, disbursement growth is expected to be encouraging both for EEB business as well as housing finance. The brokerage maintains BUY with an unchanged TP of Rs 390.


Financials
For the quarter ended 31-12-2021, the company has reported a Standalone Total Income of Rs 4120.95 crore, up 12.21% from last quarter Total Income of Rs 3672.51 crore and up 6.73% from last year same quarter Total Income of Rs 3861.12 crore. The bank has reported net profit after tax of Rs 858.97 crore in latest quarter.

Promoter/FII Holdings
Promoters held 39.99 per cent stake in the company as of 31-Dec-2021, while FIIs owned 34.6 per cent, DIIs 1.93 per cent.