How to trade Bandhan Bank stock after Q1 results? Here's what brokerages recommend

After Bandhan Bank reported weak June quarter earnings on Friday, several top brokerages have come out with their views on the stock. While Nomura, CLSA and Kotak Institutional Equities put a ‘Buy’ rating on the stock, Nuvama recommended a ‘Hold’ call on the counter.

Bandhan Bank's standalone net profit fell 19% to Rs 721 crore for the first quarter ended June. The same stood at Rs 886 crore in the year-ago period.

The fall in profit was steeper than expected as most analysts saw the decline to be around 14%. For instance, Axis Securities expected the net profit figure to be around Rs 758 crore.


The bank's net interest income came in at Rs 2,491 crore in the first quarter, marginally down, compared with Rs 2,514 crore in the same quarter last year.

This is what top brokerages recommend:

Nomura: Buy | Target: Rs 270
Nomura maintained a 'Buy' rating on Bandhan Bank for a price target of Rs 270. Q1 was a weak quarter for the private lender. PAT (Profit After Tax) beat aided by lower PCR. NPLs pick-up in 1QFY24, with lower PCR. Pick-up in growth outlook is essential for re-rating.

CLSA: Buy | Target: Rs 290
Foreign brokerage CLSA has a 'Buy' view on the counter and has put the price target at Rs 290. Q1 was a tough quarter but a gradual recovery is expected. A large increase in MFI NPAs partly driven by a regulatory reclassification. The brokerage marginally cut estimates by 3%-6% as it factors in slower growth.

Kotak Institutional Equities: Buy: | Target: Rs 260
Bandhan Bank reported a weak performance on asset quality metrics with high slippages in MFI. Growth has been slower than peers partly reflecting the weak recovery momentum in this portfolio. Valuations have de-rated quite significantly to its peers and we do see the risk-reward turning favourable as asset quality turns decisively favorable. Maintain buy rating with FV revised to Rs 260 (Rs 280 earlier).

Nuvama: Hold | Target: Rs 242
Bandhan posted weak Q1FY24 earnings though results were in line with consensus estimates. Meanwhile, earnings expectations have been rebased since the business update. Asset quality fell short of expectations with non-ECLGS EEB slippage staying high (6%) and total EEB slippage, including ECLGS, also high (10%).

We are cutting the target to 1.4x BV FY25E from 1.5x) to reflect high forward flow. At our new TP of Rs 242 (earlier Rs 255), the rating is unchanged at ‘HOLD’. While the stock has corrected, we believe Bandhan lags peers on asset quality improvement and revival in EEB loans. As such, we do not see upside triggers.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)