In Tuesday’s high-volume intraday trade, Bandhan Bank shares fell 6% on the BSE, reaching a three-year low of Rs 185.45. The private sector lender’s stock has fallen to its lowest point since April 2020. It had hit a record low of Rs 152.35 on Walk 25, 2020.
at 03:02 pm; Bandhan Bank was trading at Rs 187.55, 5% lower than the S&P BSE Sensex, which gained 0.01%. Today, the average counter trading volume increased by 1.5 times. Around 24.5 million offers, addressing 1.5 percent of the bank’s complete value, changed hands on the NSE and BSE.
The bank’s December quarter (Q3FY23) net interest income (NII) decreased by 66.2% year-over-year (YoY) to Rs 290.6 crore, resulting in a 23% decline in the stock over the past two months. 2,080.4 crore, a decrease of 2.1% from the previous year.
According to the bank, an increase in the cost of funds and a higher reversal of interest income were the primary causes of the decline in NII. Compared to the previous quarter, which saw a net interest margin of 7%, the bank’s net interest margin for the current quarter was 6.5%. The bank wrote off loans totaling Rs 8,897 crore during the quarter for a total of Rs 801 crore, of which Rs 387 crore were issued as security receipts.
Based on the initial trends and growth reports, management predicted that the bank’s performance would improve significantly in the fourth quarter.
Analysts at KRChoksey Shares and Securities say that Bandhan’s Q3FY23 financial performance was poor because of slower overall business growth, an impact on NII earnings, and higher levels of provisions that hurt overall profitability. Due to lower growth in its Microfinance Institution (MFI) segment, credit growth was modest.
However, on the asset quality front, analysts continue to be cautious regarding the MFIs’ pool of stressed assets, resulting in higher credit costs. According to the brokerage firm, we have revised down our estimates for FY24E and added FY25E. We anticipate that NII will have a CAGR of 16.6%, PPoP of 8.8%, and PAT of 251.2%.
According to HDFC Securities analysts, we are cautious about any near-term consequences from the bank’s tighter pivot, despite management appearing confident about ongoing borrower behavior reforms that reflect a gradual alleviation of stress in its core Emerging Entrepreneur Business (EEB) portfolio.
