JM Financial has buy call on Bandhan Bank Ltd. with a target price of Rs 260.0. The current market price of Bandhan Bank Ltd. is Rs 180.9 .
Bandhan Bank Ltd., incorporated in the year 2014, is a banking company (having a market cap of Rs 29197.70 Crore). Bandhan Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2022.

Investment Rationale
Bandhan is gradually reducing share of unsecured loans in the overall mix (44.5% secured and 55.5% unsecured currently) and will continue to pursue the strategy to reduce unsecured loans further (50:50 mix) over next couple of years. As a result, NIMs are likely to trend lower gradually over the medium-term, though it will be offset by
lower stress and possible lower drag of RIDF portfolio (~INR65bn currently).

Bandhan’s credit costs have remained sticky and manangement believes that significant changes w.r.t to portfolio monitoring, collection focus should reduce slippages credit costs sustainably. We believe Bandhan’s prolonged stress cycle (in the aftermath of Covid-19) has come to an end and it is moving towards more predictable growth and profitability profile. However, the change in loan mix will also mean lower profitability (than historical trends)

albeit a steadier profitability profile. Bandhan awaits outcome of the audit of the CGFMU portfolio (pertaining its claims). Also, Bandhan board has recommended renewal of Ghosh’s term as MD&CEO for 3year term beginning July 2024 and is awaiting RBI nod for the same. We believe while near-term stock price is likely to be guided by outcome on
CGFMU audit, stock remains attractively valued (1.0x FY26e P/BV) and given the change towards a more predictable growth and profitability profile offers favorable risk-reward. Maintain BUY with a revised target price of INR260.

Financials
The Bank has reported Standalone Non Performing Assets (Gross NPAs) at .00 % of total assets and Standalone Net Non Performing Assets (Net NPAs) at .00% of total assets for the quarter ending #LatestQuarterDate.

For the quarter ended 31-12-2023, the company has reported a Standalone Total Income of Rs 5210.60 Crore, up 3.55 % from last quarter Total Income of Rs 5032.19 Crore and up 7.64 % from last year same quarter Total Income of Rs 4840.94 Crore. The bank has reported net profit after tax of Rs 732.72 Crore in latest quarter.

Promoter/FII Holdings
Promoters held 39.98 per cent stake in the company as of 31-Dec-2023, while FIIs owned 34.75 per cent, DIIs 14.78 per cent.