BANDHANBNK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:14 pm

Fundamental Rating: 3.4

📊 Financials: Bandhan Bank shows moderate fundamentals with ROE at 11.9% and ROCE at 7.82%, reflecting average capital efficiency. EPS stands at ₹7.62, supported by profitability, though quarterly PAT dropped sharply from ₹372 Cr. to ₹112 Cr. (-88.1% QoQ), indicating earnings pressure. Debt-to-equity ratio of 6.76 is high, typical for banks, but adds leverage risk.

💹 Valuation: Current P/E of 19.7 is slightly above the industry average of 14.7, suggesting premium valuation. P/B ratio (~0.98) is reasonable given book value of ₹153, indicating fair pricing. PEG ratio of 0.11 highlights weak earnings growth relative to valuation. Intrinsic value appears close to current price, offering limited margin of safety.

🏦 Business Model: Bandhan Bank operates as a private sector bank with strong focus on microfinance and retail lending. Competitive advantage lies in its wide rural reach and customer base. However, asset quality risks and high dependence on microfinance borrowers remain challenges.

📈 Entry Zone: Attractive accumulation zone is around ₹135–₹145 (near support and below DMA 200). Current price ₹150 is close to DMA 50 and below DMA 200, suggesting weak momentum. RSI at 43.7 indicates neutral trend, while MACD (-2.21) signals mild weakness.

🕰️ Long-Term Guidance: Bandhan Bank is a fundamentally stable bank with strong retail presence but faces earnings pressure and asset quality risks. Best strategy is cautious accumulation near support levels and holding for long-term exposure, while monitoring profitability and credit quality.

Positive

• ROE (11.9%) indicates moderate shareholder returns 💪
• P/B ratio (~0.98) suggests fair valuation 📊
• DII holdings increased (+1.30%), showing domestic institutional confidence 🚀

Limitation

• Quarterly PAT declined sharply (-88.1% QoQ) ⚠️
• High debt-to-equity ratio (6.76) reflects leverage risk 📉
• ROCE at 7.82% is modest 📊

Company Negative News

• FII holdings decreased (-0.90%), showing reduced foreign investor confidence 📉
• Stock trading below DMA 200 indicates weak trend ⚠️

Company Positive News

• DII holdings increased (+1.30%), showing strong domestic support 📊

Industry

• Banking sector benefits from rising retail lending and digital adoption 🏦
• Industry P/E at 14.7 indicates moderate valuation compared to Bandhan Bank’s premium 📊

Conclusion

⚖️ Bandhan Bank is a private sector bank with strong retail and microfinance presence. While fundamentals are steady, earnings pressure and asset quality risks limit upside. Best strategy is cautious accumulation near ₹135–₹145 and holding for long-term exposure, while closely monitoring profitability trends.