- The Bank Nifty has relatively outperformed the Nifty during the recent corrective phase within which Bandhan Bank has been resilient and has been outperforming the Bank Nifty since the beginning of CY22. The stock has generated a breakout above the last 15 month's falling channel and is seen sustaining above the same signalling resumption of up move and offers a fresh entry opportunity
- Key observations is that the stock has almost completely retraced its five month's decline (Rs. 354-230) in just three months. A faster retracement signal positive price structure
- We expect buying demand to emerge around Rs. 320-310 in case of any corrective decline being the confluence of the 52 week's EMA and upper band of the recent falling channel breakout area
Fundamental View
- Bandhan Bank was incorporated in 2015 as RBI granted a universal banking license. The bank has a strong presence in eastern and northeastern India with MFI loans being its forte. Total 65% of loans are from emerging enterprise business (EEB). The bank has 1176 branches in 34 states, UTs and total customer base of 2.5 crore
- Bandhan Bank has underperformed in the past year as challenges pertaining to asset quality have emerged with the micro loan segment being most impacted by the pandemic. The recent quarter's performance was mixed as provisions fell sharply QoQ. Asset quality (in percentage terms) stayed largely steady. Business growth showed a better traction led by uptick in EEB loans (which forms ~65% of loan book). Earnings recovery was led by lower credit cost
- We believe materialisation of estimated recoveries of ~Rs. 5000 crore in coming quarters could bolster profitability. We expect RoA of 3.1% and RoE of 23.1% by FY24E while earnings are projected to grow at CAGR of ~32% in FY21-24E
Shares of Bandhan Bank Limited was last trading in BSE at Rs. 340.05 as compared to the previous close of Rs. 332.75. The total number of shares traded during the day was 321913 in over 5803 trades.
The stock hit an intraday high of Rs. 342.75 and intraday low of 334.60. The net turnover during the day was Rs. 109224730.00.
Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.
