Bandhan Bank share price up 30% year-to-date; what should investors do?

Bandhan Bank shares extended the gains to the fifth straight session to hit a seven-month high today, rising 4% to ₹190.20. The five-day winning streak has resulted in a cumulative gain of 10%

Bandhan Bank share price: Bandhan Bank shares have been an outperformer this year. The counter has surged nearly 30 per cent on Y-T-D basis, with most of the gains coming in the previous one month, especially on the back of third quarter results (Q3FY26) despite the lender reporting more than 50 per cent decline in net profit. The BSE Financial Services index has largely remained flat while the frontline BSE Sensex has declined 3.5 per cent during the same period.

 

In today's trade, Bandhan Bank shares extended the gains to the fifth straight session to hit a seven-month high, rising 4 per cent to ₹190.20 on the BSE. The five-day winning streak has resulted in a cumulative gain of 10 per cent in the counter.

 

Kolkata headquartered Bandhan Bank had posted a 51.7 per cent Y-o-Y decline in net profit to ₹205.59 crore in the quarter. The net profit, however, rose 84 per cent sequentially from ₹112 crore. The lender's total income declined to ₹6,122 crore during the Q3 of FY’26 from ₹6,591 crore a year ago and total expenditure increased to ₹4,677 crore.

 

On the asset quality front, Bandhan Bandh's gross non-performing assets (NPAs) improved to 3.33 per cent of gross advances, from 4.68 per cent in the corresponding quarter a year ago.

What brokerages said after Q3?

 

The third quarter result prompted brokerages to upgrade Bandhan Bank's rating. Motilal Oswal said that Q3 was in line with estimates and upgraded the stock to ‘Buy’ with a target price of ₹175.

 

CLSA had maintained its 'Outperform' rating with a target price of ₹190, saying the lender's margin largely remained stable in Q3 which brought a relief following a sharp decline in the last two quarters.

 

Meanwhile, brokerage firm Nirmal Bang in the Q3 result review report said within the coverage banks, Bandhan Bank saw a sequential improvement in credit costs and it expects asset quality to remain benign going forward.

 

Takeaways from 3Q concall

 

The brokerage said that the bank is targeting a 15 to 17 per cent CAGR for advances over the next two to three years with deposit growth expected to outpace credit growth. NIMs are expected to improve due to a projected 35 to 50 basis points reduction in the cost of funds over the coming quarters, despite an 11 basis point adverse impact from the recent repo rate reductions.

 

Bandhan Bank, which reported credit costs at 3.3 per cent in Q3FY26, it aims to reach a credit cost of 1.6 to 1.7 per cent overall by the end of FY27, it noted.

 

Investment commentary

 

Nirmal Bang has maintained ‘Hold' on Bandhan Bank with a target price of Rs 160. It said that Bandhan Bank’s stock will see an overhang in the near-to-medium term due to asset quality of the Emerging Entrepreneurs Business (EEB) portfolio which will be a key watch going forward. Also, margins will be under pressure due to lower loan growth, business mix change toward secured assets, and cut in lending rates.

 

It estimates earnings CAGR of 1.8 per cent over FY25-FY28E on the back of 12 per cent CAGR in the loan book, average cost-to-income ratio of 54.4 per cent, and average credit cost of 2.7 per cent during the same period. 

 

Bandhan Bank target price

 

Sachin Gupta, vice-president for research at Choice Broking, said that Bandhan Bank is showing good momentum on both the daily and weekly charts. On the weekly chart, Bandhan Bank is trading above the 50 and 100-week moving averages, which is a good sign. On the higher side, Bandhan Bank is facing immediate resistance at ₹191. If Bandhan Bank takes out this level, it will confirm a breakout with double bottom formation pattern.

 

"For fresh buying, my recommendation is to wait for a breakout above ₹191. Above ₹191, Bandhan Bank will head towards ₹205. Those who are already long on Bandhan Bank should stay invested with a stop loss at ₹177," the analyst added.  Bandhan Bank shares have underperformed the markets significantly over the last two, three and five years, declining 8 per cent, 18 per cent and 46 per cent, respectively, versus a rise of 13 per cent, 38 per cent and 67 per cent in the benchmark Sensex in the same period.  ===================================  Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.