Bandhan Bank Ltd. share price target

As of September 30, 2023, the loans and advances (on book + off book) stood at INR 1,076.3 Mn, a 12.3% YoY/ 4.% QoQ growth. The QoQ growth in the loan book reflects an uptick in demand for all asset verticals. The Emerging Entrepreneur Business (EEB) vertical added about INR 0.6 Mn new borrowers during Q2FY24, which led to the EEB portfolio growth by 5.2% QoQ (+0.1% YoY) at INR 539.9 Bn, contributing 50.2% of the total gross loans, as of September 30, 2023.

We revise our recommendation from BUY to HOLD.

Bandhan Bank (Bandhan) reported subdued Q2FY24 PAT at INR 7.2bn (flattish QoQ; RoA at 1.9%) while asset quality deteriorated QoQ. Despite higher-than-expected slippages and flattish PCR, the bank reported stable (and lower-than-expected) credit costs as there were nil write-offs. Unlike other players, asset quality improvement has been much slower at Bandhan.

Wipro’s IT Services revenue dipped 2.3% QoQ USD in Q2FY24. The slip was much steeper than our/consensus’ expectations of -0.5%. Revenue growth came in at the lower-end of Wipro’s guidance for Q2FY24.

We maintain our BUY recommendation on the stock.

Despite QoQ flattish NIMs, Bandhan Bank (Bandhan) has reported soft Q1FY24 earnings due to a sharp decline in AUM QoQ, elevated opex, while headline asset quality has deteriorated. PAT declined 11% QoQ to Rs7.2bn, pulled down by flattish NII QoQ and a rise in opex on the back of sizeable branch expansion (branches are up 130 QoQ).

The advances as of March 31, 2023, stood at INR 10,47,568 Mn, a growth of 11.5% YoY/ 13.8% QoQ. The EEB (group loans) mix fell further to 35.0% from 47% in FY22 (37.0% in Q3FY23). The bank has deliberately reduced its MFI book mix to 26.0% by March 25. The loan book of EEB Group / EEB Individual / Housing / Commercial Banking / Retail contributed 34.9%/ 17.2%/ 24.3%/ 18.5%/ 5.1%, respectively.