Bandhan Bank jumps 13% post Q1FY21 biz update; Analysts maintain 'buy'

Shares of Bandhan Bank jumped as much as 12.6 per cent to Rs 401.95 on the BSE on Tuesday after the bank reported healthy loan and deposit growth in the April-June quarter on a yearly basis despite nationwide Covid-19-induced lockdown.

The Kolkata-headquartered bank saw its deposits growing 35 per cent year-on-year (YoY) to Rs 60,602 crore at the end of Q1FY21, compared to Rs 44,796 crore in Q1FY20. Sequentially, deposits grew 6 per cent from Rs 57,082 crore seen in Q4FY20. 

Meanwhile, loans and advances grew 18 per cent YoY to Rs 74,325 crore in Q1FY21 as against Rs 63,164 crore in Q1FY20. In the March quarter of FY20, loan book stood at Rs 71,846 crore.

"Subsequent to Unlock 1, the collection in Micro Banking loan vertical has shown positive traction from June 01, 2020. There has been steady improvement in collection efficiency (in value terms) during the month of June, 2020 and ended with 68 per cent as on June 30, 2020. This number has further improved to 70 per cent (resulting in effective moratorium of 30 per cent) as on July 03, 2020. Nearly 70 per cent of customers have started repaying their loans," the bank said in a statement.

For non-micro banking advances, collection efficiency for the month of June, 2020 stands at 84 per cent (resulting in effective moratorium of 16 per cent), it added.

"Bandhan continues to report strong deposit growth at 35.3% YoY / 6.2% QoQ to Rs 60,600 crore, led by growth in CASA deposits at 47.3% YoY / 6.9% QoQ to approximately Rs 22,500 crore. Thus, the CASA ratio improved to 37.1% v/s 36.8% in FY20. Overall, the proportion of retail deposits stood stable at ~78 per cent," said analysts at Motilal Oswal Financial Services in its latest report.

Bandhan Bank, the brokergae noted, has created Covid-19-related provisions of Rs 690 crore to deal with higher delinquencies in the near term. "LGD should remain lower (v/s that of peers) due to Bandhan’s strong market share and higher unique customer base. We maintain a Buy rating, with unchanged TP of Rs 350 (2.6x FY22E)," it said.

Global brokerage Macquarie, on the other hand, has an 'outperform' rating on the stock with a target price of Rs 300. 

"Bandhan Bank didn't mention its Cumulative Repayment Rate (CRR) in its Une quarter update. The metric would be key monitorable when the company reports its earnings," it said. 

At 3:05 pm, the stock was trading 11.5 per cent higher at Rs 398.05 on the BSE, as against 200 points or 0.55 per cent gain in the benchmark S&P BSE Sensex at 36,688.47 level.