Bandhan Bank Share Crash: Bandhan Bank shares fell by 15% today, July 22, even as profits rose 35% in Q1. Know why the stock fell, what to buy, hold or sell now.
Bandhan Bank Share Price Target: Bandhan Bank presented excellent results in the June quarter. The bank’s profit increased by 35% year-on-year to ₹502 crore. Despite this, a huge fall of about 15% was seen in the stock on Wednesday. In such a situation, the biggest question in the minds of investors is that why did the stock fall even after good earnings? And now should one buy this dip, hold it or is it better to exit? Let us know the opinion of experts…
Bandhan Bank’s profits increased, yet why did its shares fall?
Usually, when a company’s profits increase, its shares rise, but the opposite happened with Bandhan Bank. The biggest reason for this was the weak guidance of the bank regarding its future. The management clearly said that in the coming times the bank’s RoA (Return on Assets) may be lower than earlier estimates. Earlier the bank expected RoA to be 1.6% to 1.8% by FY 2026-27, but now it has been reduced to 1.2% to 1.4%. Investors did not like this and sharp selling of shares was seen.
What was special in the quarterly results of Bandhan Bank?
Bandhan Bank’s April-June quarter results were strong in many respects. Net profit increased by 35% to ₹502 crore. Net interest income (NII) increased by nearly 6% to ₹2,921 crore. Total advances increased by 16.4% to over ₹1.55 lakh crore. The gross NPA of the bank came down to 3.1% and Net NPA to 0.9%. Provision also decreased by about 40% on annual basis. That means there was improvement in the operation and asset quality of the bank.
Then what are the investors worried about Bandhan Bank shares?
The market not only looks at the current results but also looks at the future. Bandhan Bank says the cost of raising funds may increase in the coming months. There will be pressure on interest margins. Expenditure on technology will increase. Competition for deposits is intense and external challenges like global environment and monsoon can also have an impact. This is the reason why the market expressed concern about future earnings.
What are brokerage houses saying about Bandhan Bank shares?
Motilal Oswal
Brokerage firm Motilal Oswal has reduced the earlier Buy rating to Hold. However, the target price of ₹ 225 has been maintained. The company has also reduced its earnings estimates for FY27 and FY28.
JP Morgan
JP Morgan has maintained neutral rating on the stock and has given a target of ₹ 175. According to him, the new guidance of the bank may increase the pressure in the near future.
Nomura
Brokerage firm Nomura has set a target of ₹190. He says that increasing the interest rates on savings and FD will increase the bank’s expenses. Brokerages have expressed concern over rising deposit costs and declining margins.
CLSA
CLSA’s approach is a little different from other brokerages. The brokerage has given a target of ₹235 while maintaining outperform rating. He believes that the market’s concern has already been reflected in the stock to a great extent.
Jefferies
Global brokerage firm Jefferies believes that the stock is quite cheap at the current valuation and there is little scope for further decline from here. However, he has also reduced earnings estimates.
Experts’ opinion is divided regarding Bandhan Bank shares
Of the total 26 analysts covering Bandhan Bank, 15 have advised buy, 7 have advised to hold and 4 have advised to sell. This means that the number of analysts who have positive opinions in the market is still high, but not all of them are ignoring the challenges of the near future.
Disclaimer: This article has been prepared for general information purposes only. The information given here is based on different public sources and brokerage reports. Investing in the stock market is subject to risk. Before deciding to buy, hold or sell any stock, do your research and consult your financial advisor.