CLSA has reiterated its ‘High Conviction Outperform’ rating on Bandhan Bank with a target price of ₹220, following insights from a recent management meeting. The brokerage highlights notable operational improvements in the microfinance (MFI) segment, with collection efficiency showing signs of sustained recovery over the past two months. This progress has led to lower overdue formations on a sequential basis.
While the new regulatory cap limiting borrower access to three lenders could cause temporary disruptions in the upcoming quarter, management expressed confidence that operations would normalize by the third quarter of FY26. A major strategic shift is underway, with the Managing Director setting a key objective to increase the share of secured assets by FY27. In addition, significant investments are being made in technology and audit controls.
Of particular note is Bandhan’s recent collaboration with Salesforce, which will introduce a new loan origination system (LOS) to all 1,700 branches by the next quarter. This digitization effort is expected to greatly enhance operational efficiency and loan processing times. Management has guided for a return on assets (RoA) of 1.8–2% by FY27, though CLSA maintains a more conservative RoA estimate of 1.5%.
CLSA believes the bank is entering a more stable phase and sees potential upside as credit quality stabilizes and structural changes take shape.
