Target: ₹260
CMP: ₹199.90
Bandhan Bank announced that RBI has approved the appointment of Partha Pratim Sengupta as MD and CEO of the bank for a period of three years. He is expected to take charge before November 10.
We believe the appointment brings clarity on leadership at Bandhan Bank which in turn removes a critical overhang. Sengupta’s career experience in credit across retail and corporate banking should help Bandhan Bank, where credit performance has been challenging over the past few years.
Additionally, Bandhan Bank also announced the outcome of the forensic audit under the claims made under CGFMU and ECLGS schemes during Covid-19. .
In addition, the bank has recoveries worth ₹228 crore on this portfolio which the bank holds on its balance sheet. As a result, the bank will account for Other Income through these events worth ₹543 crore in Q225 (38 per cent of Q2FY25e PBT). In addition, NCGTC has allowed a fresh claim worth ₹347 crore to be submitted under ECLGS for consideration.
While microfinance as a space remains under asset quality pressure, we believe that Bandhan Bank has grown meaningfully slower than the rest of the industry in this cycle which should mitigate incremental stress. The stock currently trades at inexpensive valuations of 1.0x FY26e P/BV and offers attractive risk-reward in our view.
