Bandhan Bank Ltd. share price forecast

Maintain ADD with a TP of INR273 (standalone bank at 1.9x Sep-24 ABVPS). Bandhan Bank (BANDHAN) hosted an Analyst Day to articulate its medium-term strategic priorities around portfolio diversification and strengthening of its customer franchise. While the bank's focus on building borrower discipline in its flagship business and accelerated investments in portfolio diversification and distribution could gradually yield constructive outcomes, near-term return ratios are likely to remain soft from continued provisions and elevated opex. The management guided for major stress flowing into the 90dpd bucket, resulting in sustained one-off provisioning requirement during H2FY23. While we factor in elevated credit costs, we remain conservative on the underlying customer franchise, arguing for a lower multiple as BANDHAN pivots towards relatively low-risk businesses, with implications for potential franchise RoEs.

The senior management team of Bandhan Bank (Bandhan) during its analyst day
yesterday (1st Dec’22) articulated its strategy on portfolio diversification, geographical
expansion and future growth along with delinquency and provisioning assessment for
H2FY23.

JSW Energy: Net generation declined 1.7% YoY to 6.7bn in the quarter due to weak merchant market and maintenance shutdown at the Ratnagiri station. However, blended realisation was up 17.8% YoY to INR3.8/unit andit was down 29.9% QoQ. Accordingly, revenue increased 14.4% YoY to INR23.9bn, while PAT was up 35.6% YoY to INR4.6bn. Receivables were down to 66 days vs 81 YoY but were up QoQ (45 days) due to the seasonality factor in hydro business. Committed pipeline of 10GW by FY25 is well on time. Over and above this, the company has ventured into BESS, winning 1GWh in SECI tender. Acquisition of Mytrah Energy is expected to be completed in Q3FY23, which along with the phase wise commissioning of SECI IX-810MW and X-450 MW will take the total operational capacity to 9.1GW by FY24 (65% RE). Further, JSW Energy is also planning to vertically integrate and venture into the polysilicon market with the Utkal Ind-Bharath Project having 700MW capacity, whose resolution plan the NCLT has approved. The company is generating INR24-25bn per annum in cash profit, which is sufficient to fund its pipeline projects and aims to maintain debt/EBITDA level below 4-5x. However, the valuation looks expensive at INR318 (RoE - ~8.9%, FY25 P/E - 28.5x, P/BV - 2.4x); thus, we maintain SELL with a revised SoTP of INR186 (vs INR160 earlier). Bandhan Bank: Bandhan Bank's Q2FY23 earnings missed our estimates with a disappointing performance on asset quality, impairment recognition on the entire restructured portfolio (slippages at 19.2% annualised), and consequent accelerated write-offs (17% annualised)....

Bandhan Bank’s (Bandhan) Q2FY23 earnings failed to meet I-Sec as well as consensus low expectations.

Consensus expectations were set lower for Bandhan Bank following a series of events in Q1FY23.

Bandhan Bank: Despite a strong rebound in advances (+20% YoY), Bandhan reported a ~14% miss on account of soft NIMs (8%) and lower other income (-66% YoY). Incremental growth was led by non-EEB businesses, in line with the bank's strategy to drive portfolio diversification (FY25 targeted Group EEB share of portfolio at 26%). Gross slippages were elevated (~5.4%), stemming from the EEB portfolio due to Assam floods/restructuring resulting in a 79bps QoQ increase in GNPA. We remain watchful of the asset quality and the impact of a shift in portfolio mix on the bank's steady-state return metrics. We reduce our FY23E /FY24E estimates to factor in lower other income and higher credit costs. Maintain BUY with a revised target price of INR396 (2.7x Mar-24 ABVPS). Mphasis: Mphasis (MPHL IN) posted lower revenue and in-line margin in Q1. Growth in direct international business (+2.4% QoQ CC) was impacted by softness in the mortgage business unit. MPHL's growth prospects remain strong, basis (1) healthy deal intake (USD 302mn net-new TCV in Q1FY23, up 18% YoY ex-large deal of USD 250mn won in Q1FY22); (2) trending deal pipeline (up 6% QoQ and 10% YoY); (3) lower revenue contribution of the DXC business (<5% of the revenue); and (4) high growth from account acquisition channel. We expect the softness in the mortgage segment (near-term) and DXC weakness to have a combined impact of 250bps to FY23 growth. While deal conversion in the UK geography may have some impact, USD 60mn+ TCV large cloud transformation deal win and onshore pricing are...

Transient headwinds define the quarter

We recommend a BUY rating on the stock with a target price of Rs 343/share, implying an upside of 10% from the CMP.

APL Apollo: APL Apollo Tubes' (APL) Q4 revenue increased 63% YoY/31% QoQ to INR42.1bn, led by strong volume growth (+26.7% YoY) and higher realisation (+28.5% YoY). Value-added products contributed to 63% of overall volume in Q4, vs 57% YoY, led by strong growth across Apollo Z rust proof (+47% YoY) and Apollo proof sheet segment (+242% YoY). EBITDA/ton, however, increased marginally by 1.7% YoY to INR4,823, vs INR4,742 YoY. Strong volume and improved realisation led to a 29% YoY rise in EBITDA to INR2.7bn, with margin contracting 167 bps YoY to 6.3% due to higher sale of general structures. PAT increased by 37% YoY to INR1,630mn, which was further supported by a fall in interest expenses. Given (1) the Raipur plant is beginning operation on high-value product, (2) increased mix of value-added products (75% in FY25), and (3) enhanced government infrastructure spending, we expect volume and EBITDA/ton to improve, going ahead. We revise our estimates by 11%/7% for FY23E/24E and revise our TP to INR1,142 (34xFY24 EPS), from INR1,113 earlier; retain BUY. CESC: CESC's consolidated PAT in Q4FY22 increased marginally by 3.7% YoY to INR4.5bn, as higher earnings in the Noida circle (from higher power demand) were offset by increased losses in the distribution franchisee (DF) business (a loss of INR270mn vs a profit of INR270mn YoY), given penalty waiver in Malegaon circle. Dhariwal profitability was lower due to a higher YoY base (from one-offs recovered in Q4FY21), while standalone PAT declined marginally by 4.1% YoY. The Dhariwal project has signed a three-year medium-term PPA for...