Share price of this mid-cap bank stock moved down by nearly 9.04 percent on BSE to Rs. 179.55 in the morning trading session of Monday, compared to its previous closing price of Rs. 197.4, after reporting 240 percent QoQ pre-sales growth in the Q4 FY24 business updates.
With a market capitalisation of Rs. 18,936 crores, at 12:39 p.m. the shares of Bandhan Bank Limited were trading in the red at Rs. 187.5, down by 5%.
The company has delivered negative returns of about 10.7 percent in the last one year and nearly 23.8 percent in the last six months and has been the worst performer on the Nifty Bank index so far in 2024, delivering negative returns of around 23.2 percent.
The stock is in the F&O ban for the trading session of Monday, which means that no new positions can be created in the stock.
According to recent regulatory filings with the stock exchanges, Mr. Chandra Shekhar Ghosh, Managing Director & Chief Executive Officer of Bandhan Bank since July 10, 2015, would retire from the services of the Bank as the MD&CEO upon completion of his present tenure on July 09, 2024.
Further, following the resignation of its CEO, brokerage firm Jefferies downgraded Bandhan Bank to ‘underperform’ from its previous ‘buy’ rating.
Jefferies has reduced its price target for the bank stock by 41 percent to Rs. 170 from Rs. 290 before, implying a potential downside of about 14% from the previous closing price of Rs. 197.4.
The brokerage stated that the CEO’s resignation was a negative and unexpected surprise, despite the fact that the board had approved a three-year reappointment and the application was awaiting approval from the Reserve Bank of India (RBI).
Moreover, Jefferies also mentioned that any uncertainty could lead to slower growth and higher credit costs for the lender.
As a result, the brokerage lowered its growth outlook for the bank along, as well as its credit cost estimates for FY25-26, and reduced the brokerage’s Earnings Per Share (EPS) estimates for the lender by 10-14 percent.
The brokerage firm also anticipates the valuations of the Bank to remain under an overhang due to such concerns.
In Q4 FY23-24, Bandhan Bank recorded a 17.8 percent YoY increase in loans and advances to Rs. 1.28 lakh crore compared to Rs. 1.09 lakh crore in Q4 FY22-23.
The total deposits grew by 25.1 percent year-on-year to Rs. 1.35 lakh crore in Q4 FY23-24 as compared to Rs. 1.08 lakh crore in Q4 FY22-23.
In terms of financials, the company’s revenue from operations grew by 3.85 percent from Rs. 4,492 crore in Q2 FY23-24 to Rs. 4,665 crore in Q3 FY23-24.
The net profit of the company also increased by 1.66 percent to Rs. 733 crore in Q3 FY23-24 from Rs. 721 crore in Q2 FY23-24.
Bandhan Bank Limited is a commercial bank focused on serving underbanked and underpenetrated markets in India.
The bank has a pan-India presence and offers a wide range of banking products and services and asset and liability products & services designed for micro banking and general banking as well as other banking products and services to generate non-interest income.
Written by Shivani Singh
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