Q4FY21 Result Update - Bandhan Bank - ICICI Direct

Bandhan Bank posted weak results on the operating front with elevated provisioning hurting profitability. Asset quality performance and developments in key states like Assam and West Bengal would call for a cautious approach in the near term. Collection efficiency (including write-off) saw improvement from 92% to 95% QoQ in the micro banking segment. Key state of Bengal saw collections rise from 90% to 95% QoQ but in Assam collection efficiency dipped from 88% to 83%. As per management commentary, collections in April 2021 declined ~3-4% from the March level.

Valuation & Outlook

Microcredit at 67% of loan book and lower than expected recoveries due to second Covid wave have further raised caution towards the bank. With loan portfolio in key states like West Bengal and Assam facing challenges due to multiple reasons and clarity on law change awaited, near term outlook on overall asset quality is uncertain. The management has indicated that they plan to build provisions buffers irrespective of external environment, which could keep credit cost elevated. Restructuring in non-micro book is also elevated. Hence, we maintain our HOLD rating with a revised target price of Rs. 330 (Rs. 370 earlier) by valuing the bank at 2.5xFY23E ABV.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_BandhanBank_Q4FY21.pdf

Shares of Bandhan Bank Ltd was last trading in BSE at Rs.297 as compared to the previous close of Rs. 294.65. The total number of shares traded during the day was 932019 in over 13096 trades.

The stock hit an intraday high of Rs. 302.45 and intraday low of 291.3. The net turnover during the day was Rs. 276423787.

Source : Equity Bulls

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