BANDHANBNK - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.6

📊 Fundamental Analysis

Bandhan Bank (BANDHANBNK) presents a mixed picture for long-term investors

ROE (11.9%) & ROCE (7.82%): Below ideal levels for long-term compounding.

Debt-to-Equity (6.60): High leverage typical of banks, but adds risk.

PEG Ratio (0.07): Extremely low, indicating undervaluation relative to earnings growth.

EPS (₹12.8): Reasonable, but not strong enough to justify aggressive growth expectations.

Dividend Yield (0.92%): Modest income generation.

📉 Recent Performance & Risks

Q1 FY26 PAT: ₹372 Cr, down 65% YoY

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Net Interest Income: Fell 7.7% YoY to ₹2,757 Cr

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Asset Quality: Net NPA ratio rose to 1.36%, with gross NPAs at 4.96%

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Loan Book Shrinkage: Down 2.5% QoQ

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Management Transition: Founder Chandra Shekhar Ghosh retired; new leadership executing “Bandhan 2.0” strategy focused on secured lending and digital transformation

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📈 Technical & Valuation Insights

Current Price: ₹163

52-Week Range: ₹128 – ₹215

DMA 50 / DMA 200: ₹175 / ₹172 — trading below both, bearish trend

RSI (31.7): Near oversold zone

MACD (-2.56): Negative, confirming weakness

Stock P/E (12.8) vs Industry P/E (12.2): Fairly valued

🟢 Ideal Entry Price Zone

Given the valuation and technical setup

₹145 – ₹160: Accumulation zone based on historical support and oversold indicators

₹128 – ₹135: Deep value zone near 52-week low for aggressive long-term investors

Avoid chasing above ₹175 unless earnings stabilize.

🧭 Long-Term Outlook

Price Targets

2025: ₹222

2026: ₹380

2027: ₹450

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Growth Drivers

Expansion into secured lending (housing, vehicle, SME)

Digital banking transformation

Improved underwriting and recovery systems

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Risks

Asset quality deterioration

High provisioning and credit costs

Shrinking microfinance portfolio

🛑 Exit Strategy (If Already Holding)

If you're already invested

Holding Period: 2–4 years, with quarterly review of asset quality and earnings

Exit Triggers

ROE stagnates below 10% for 2+ quarters

Net NPA rises above 2%

Price exceeds ₹215 without EPS growth — consider partial profit booking

Trailing Stop-Loss: ₹145 to protect downside

🧠 Final Verdict

Bandhan Bank is a turnaround candidate with deep value potential but elevated risk. The PEG ratio and price-to-book suggest undervaluation, but weak asset quality and earnings volatility warrant caution. Ideal for tactical entry near ₹145–₹160 with a 2–4 year horizon. If holding, monitor quarterly results and asset quality metrics closely.

Would you like a comparison with peers like IDFC First Bank or AU Small Finance Bank to assess alternatives?

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