Jefferies has reiterated its Buy rating on Bandhan Bank and raised the target price to ₹215, implying a 16% upside from the current market price of ₹185.40. Despite reporting a sharp 65% year-on-year decline in Q1 profit to ₹4 billion, the result was slightly ahead of Jefferies’ estimates, helped by better-than-expected net interest income (NII) and lower credit costs.
The brokerage noted that while slippages and credit costs have improved, they remain elevated due to ongoing stress in the microfinance (MFI) segment. Loan growth was largely led by lower-margin secured segments, which in turn weighed on net interest margins (NIMs).
Jefferies has revised its earnings estimates downward, cutting FY26 earnings by 6% and FY27/28 by 3%, factoring in the impact of the recent rate cut, faster shift towards non-MFI growth, and a slightly elongated credit cycle.
Despite near-term challenges, Jefferies believes valuations are reasonable, and a turnaround in the MFI cycle would act as a key trigger for stock performance in the coming quarters.
Disclaimer: The brokerage view is based on publicly available research and does not constitute investment advice. Please consult a certified financial advisor before making any investment decisions.
