Bandhan Bank shares up 23% in a month. Brokerages see more upside
Premium- Jefferies has a Buy recommendation on Bandhan Bank shares with a target price of ₹318.70 per share
Bandhan Bank reported a robust pickup in business growth in the traditionally busy fourth quarter. Improving trends in collection efficiency should continue to moderate credit cost and support earnings, said domestic brokerage Motilal Oswal.
“However, movement in the SMA book and performance of the restructured book remains a key monitorable. We expect Bandhan Bank to deliver around 25% RoE by FY24. We maintain our Neutral rating with a target price of ₹320 per share," the note added.
Bandhan Bank on Tuesday said its loan book crossed the ₹1 lakh crore-mark for the first time in January-March 2022, registering an increase of 16% compared to the same period a year ago. The bank's total loan stood at ₹1,01,359 crore during Q4 of FY22.
The lender's deposits grew at 24% year-on-year (YoY) to ₹96,331 crore, of which the CASA (Current Account Savings Account) deposits grew 18% to ₹40,072 crore.
The bank's loan coverage ratio (LCR) was at around 129% while collection efficiency for the quarter was around 96%, which was up from 93% recorded in the previous quarter.
For 4QFY22, Bandhan Bank reported healthy asset growth at 16% YoY/15% QoQ. Encouragingly, collection efficiency in March 2022 further improved to 95% in MFI & 96% overall, said analysts at Jefferies.
“Bandhan Bank may see negative net slippages (slippages < recoveries) in 4Q; bank is carrying sufficient provision buffers, which should keep credit costs low. Sharp decline in CASA ratio due to high bulk deposits should normalize in 1QFY23," the brokerage added. Jefferies has a Buy tag on the bank stock with target price of ₹318.7 per share.
Bandhan Bank shares have surged over 23% in the last one month, whereas the stock is down about 8% in a year's period.
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