Bandhan Bank crashes to 3-year low on heavy volumes

The stock has slipped 6% to Rs 185.45 and trades at its lowest level since April 2020.

Shares of Bandhan Bank hit three-year low at Rs 185.45 as they slipped 6 per cent on the BSE in Tuesday’s intra-day trade amid back of heavy volumes. The stock of private sector lender quoted at its lowest level since April 2020. It had hit a record low of Rs 152.35 on March 25, 2020.

At 03:02 pm; the Bandhan Bank was trading 5 per cent lower at Rs 187.55, as compared to 0.01 per cent rise in the S&P BSE Sensex. The average trading volumes on the counter jumped 1.5 times today. A combined around 24.5 million shares representing 1.5 per cent of total equity of the Bank changed hands on the NSE and BSE.

In past two months, the stock has tanked 23 per cent after the bank reported a 66.2 per cent year-on-year (YoY) dip in its December quarter (Q3FY23) profit at Rs 290.6 crore, while its net interest income (NII) dropped 2.1 per cent YoY to Rs 2,080.4 crore.

The Bank said, fall in NII was mainly because the higher reversal of interest income and also increase the cost of funds. The Bank’s net interest margin for the quarter was 6.5 per cent compared to the 7 per cent last quarter. During the quarter Bank has sold written off loans Rs 8,897 crore at an aggregate value of Rs 801 crore out of that Rs 387 crore has been issued as Security Receipts.

The management had said with the initial trends and reports from the growth, they are confident that Q4 will see good improvement in the performance of the Bank.

According to analysts at KRChoksey Shares and Securities Bandhan reported a subdued financial performance in Q3FY23, owing to slower growth in overall business, impacted NII Income and elevated levels of provisions which took hit on the overall profitability. The credit growth was modest owing to lower growth in its microfinance institution (MFI) segment, it added.

However, on the asset quality front, analysts remain cautious on the MFI stressed asset pool and accordingly kept credit costs slightly at higher levels. “We reduce our estimates for FY24E and have introduced FY25E. We expect CAGR in NII at 16.6 per cent, PPoP at 8.8 per cent, and PAT at 251.2 per cent over FY22-25E,” the brokerage firm said.

While the management seemed confident of the ongoing borrower behaviour corrections reflecting in the gradual abating of stress in its core Emerging Entrepreneurs Business (EEB) portfolio, we are cautious about any near-term outcomes from the bank’s hard pivot ahead, analysts at HDFC Securities had said.