Bandhan Bank shares are under pressure following a weak Q3 performance, with brokerages CLSA and Jefferies offering mixed outlooks amid rising asset quality concerns. The stock, currently trading at ₹151.60, could see an upside of up to 45% based on CLSA’s projections, while Jefferies has trimmed its target.
CLSA has maintained an Outperform rating with a target price of ₹220, suggesting a 45% upside from current levels. The brokerage noted that while net interest income (NII) was in line, both pre-provision operating profit (PPOP) and profit after tax (PAT) missed expectations. Slippages spiked from ₹11 billion to ₹16 billion, primarily driven by the microfinance segment, alongside a technical write-off of ₹12.7 billion. However, management remains optimistic, highlighting that collection efficiency is improving, with microfinance slippages expected to stabilize within 1-2 quarters. The bank’s AUM growth moderated from 21% to 14% YoY, but it recovered ₹5.4 billion from NCGTC for CGFMU claims during the quarter.
On the other hand, Jefferies has cut its target price to ₹185 while maintaining a Buy rating, indicating a potential 22% upside. The brokerage pointed out that Bandhan Bank’s Q3 profit of ₹4 billion marked a 42% year-on-year decline, missing estimates due to higher write-offs and one-time costs that offset certain one-time gains. Slippages remained high at 6% of past year’s loans, with expectations of further increases in Q4 before tapering off in 1HFY26. Jefferies highlighted that loan growth will shift towards secured lending, which may compress net interest margins (NIMs) but will reduce earnings volatility. Due to continued asset quality pressures, Jefferies has also reduced its FY26-27 profit estimates by 6-8%.
While Bandhan Bank’s management focuses on improving collection efficiency and diversifying its loan book, the near-term outlook remains clouded by elevated slippages and profitability challenges. The stock’s trajectory will largely depend on how quickly these asset quality issues are resolved.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)