Synopsis: Bandhan Bank shares fell 14% after the bank cut its FY27 RoA guidance to 1.2–1.4% from 1.6–1.8%, citing higher funding costs, technology spending, and uncertainties. Despite strong Q1 profit growth, improving asset quality, and loan expansion, concerns over slower profitability recovery and cautious brokerage views weighed on investor sentiment.
The shares of a Mid-Cap company specialising in financial inclusion, serving unbanked and under-banked populations across India, which provides micro-banking for small-scale enterprises, affordable housing finance, and a comprehensive suite of general banking services, are in focus as they have fallen by 14 percent in the day’s trade.
With a market capitalization of Rs. 29,394.12 crores in the day’s trade, the shares of Bandhan Bank Ltd declined upto 14 percent, reaching a low of Rs. 179.7 per share compared to its previous closing price of Rs. 208.60 per share.
What Happened
Bandhan Bank Ltd, engaged in financial inclusion, serving unbanked and under-banked populations across India, is in focus following its Q1 results, brokerage views, and other updates as follows.
Bandhan Bank reported a 34.9% year-on-year increase in net profit to Rs. 502 crore in Q1 FY27, compared with Rs. 372 crore in the same quarter last year. However, on a sequential basis, net profit declined 6% from Rs. 534 crore in Q4 FY26.
Asset quality continued to improve during the quarter, with Gross NPA declining to 3.15% from 3.27% QoQ and Net NPA improving to 0.93% from 0.97% QoQ. Provisions stood at Rs. 683 crore, significantly lower than Rs. 1,147 crore a year ago and broadly stable compared with Rs. 677 crore in the previous quarter.
On the operating front, net revenue increased 1.2% YoY to Rs. 3,524 crore, while Net Interest Income (NII) grew 5.9% YoY to Rs. 2,921 crore. The Net Interest Margin (NIM) remained stable at 6.2% on a sequential basis, indicating resilient core lending margins.
Profitability remained healthy despite a marginal moderation in Return on Assets (RoA) to 0.25% from 0.27% QoQ. Overall, the quarter reflected strong year-on-year earnings growth, improving asset quality, and stable margins, although sequential profit growth remained under pressure.
As of June 30, 2026, total deposits grew 7% YoY to Rs.1.65 lakh crore, while gross advances increased 16% YoY to Rs.1.56 lakh crore. CASA deposits stood at Rs.48,479 crore, with the CASA ratio above 29%, and CASA plus Retail Term Deposits accounted for 74% of total deposits.
The bank delivered strong credit growth across key segments, with the Retail book (excluding housing) growing 45% YoY, Wholesale Banking advancing 38% YoY, and the Housing book expanding 6% YoY.
Guidance Cut
Bandhan Bank has revised its Q4 FY27 exit RoA guidance downward to 1.2%–1.4% from the earlier 1.6%–1.8%, despite delivering 1.0% RoA in Q1 FY27. The revision reflects a challenging operating environment marked by elevated funding costs, geopolitical uncertainties, unpredictable monsoons, and higher technology-related investments.
The approximately 40 bps reduction in RoA guidance is primarily driven by a stable Net Interest Margin (NIM) outlook, instead of the previously expected expansion, along with a 10 bps impact from higher operating expenses related to technology spending and digital initiatives. However, the bank has maintained its FY27 loan growth guidance of 14% YoY, while expecting NIM to remain stable at around 6.2% amid continued pressure from higher funding costs.
Macquarie on Bandhan Bank
Macquarie has maintained its Underperform rating on Bandhan Bank with a target price of Rs. 130, citing an uncertain recovery path. The brokerage noted that the bank’s Q1 PAT missed expectations, while management lowered its margin outlook.
It also highlighted that credit costs remain elevated and the bank has revised its RoA guidance downward due to persistent cost pressures, indicating that profitability recovery may take longer than previously expected.
Jefferies on Bandhan Bank
Jefferies has maintained its Buy rating on Bandhan Bank and raised its target price to Rs. 240 from Rs. 215, saying the bank delivered a steady quarter despite issuing conservative guidance. Profit beat estimates, supported by stronger loan growth, higher fee income, and improving MFI asset quality.
While management lowered its FY27 exit RoA guidance to reflect higher funding costs and operating expenses, Jefferies cut its earnings estimates by around 10%. However, it believes the current valuations provide a cushion against downside risks.
BofA on Bandhan Bank
BofA has maintained its Buy rating on Bandhan Bank with a target price of Rs. 220, noting that while Q1 earnings were broadly in line with expectations, the bank has pushed out its RoA aspirations. Management lowered its exit FY27 RoA guidance to 1.2–1.4%.
The brokerage highlighted improving credit costs as a positive, but said elevated operating expenses continue to weigh on profitability. Overall, BofA believes the moderation in credit costs is encouraging, even as profitability targets have become more conservative.
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