Bandhan Bank, situated in Kolkata, had a sharp selloff on Monday, with shares plummeting by about 7%. The overall decline in banking stocks as broader markets tumble in response to subpar global cues is to blame for the gloomy tenor in Bandhan. The basket of stocks had a general selloff, with banking stocks taking the most blow. In contrast, ICICI Securities has recommended that investors “buy” Bandhan Bank with a target price of ₹408 per share.

Shares of Bandhan Bank finished at ₹261.50 on the BSE, down 5.97%. The shares market value dropped to an intraday low of ₹42,122.89 crore, a loss of at least 6.8% on the day.

The market value of the bank is roughly ₹42,122.89 crore.

On Friday of last week, the price of a share of Bandhan Bank was ₹278.10.

Bandhan Bank Share Price Target; Should You Buy ?

In their analysis of Bandhan Bank, ICICI Securities Research Analysts Kunal Shah, Renish Bhuva, and Chintan Shah stated: “Following a string of occurrences in Q1FY23, expectations for Bandhan Bank were lowered by consensus. Given the lag effect of the Assam floods and the forward flow from the restructured pool, the GNPA and SMA-2 trends in Q2FY23 are not anticipated to be positive. The bank’s credit cost projection (of 2.5%) for H1FY23 was projected to be upfronted in large part due to the stress pool’s portfolio seasoning toward higher delinquent buckets. Declassification of loans from under some PSL categories has caused a pause in PSLC sales, which reflects pressure on fee income.”

Bandhan Bank reported a PAT of ₹886.5 crore in the first quarter of FY23, an astounding 137.6% increase from ₹373.1 crore in Q1FY22. Net interest income (NII) was ₹2,514.4 crore, up 18.9% from Q1 FY22’s ₹2,114.1 crore.

The bank’s total advances increased by 20.3% year over year as of June 30, 2022, to reach ₹96,649.7 crore, while deposits increased by a similar amount, 20.3% year over year, to reach ₹93,057 crore. GNPA increased to 7.25% as of June 30, 2022, from 8.18% as of June 30, 2021. Additionally, Net NPAs improved to 1.92% from 3.29% in Q1FY22. The provisions dropped drastically, falling by 56% year over year to ₹642.4 crore.

According to the analysts’ report, Bandhan plans to open more than 500 branches in FY23, the majority of which would be outside of its primary states of Assam and West Bengal. The bank is also making significant investments in technology.

All of this would necessitate more operating expenses, hence, in their opinion, the guidance of opex to assets in the range of 2.6-2.7% should hold.

Additionally, the analysts’ research stated, “However, after the interruption caused by the amended RBI regulations and the Assam floods in Q1FY23, we anticipate a trend towards normalisation in terms of disbursement and collection efficiency. Regarding the expansion of mortgage loans, we are also optimistic. Positively, if the PSL were not further declassified, the additional requirements for RIDF investment or PSL certificate buyout would be quite low. Franchise investment will probably continue to rise. Maintain BUY with a new target price of Rs. 408 (formerly Rs. 414) and a 2.5x FY24E book valuation.”

At the conclusion of the June 2022 quarter, Bandhan Bank had 5,640 banking locations. As opposed to 1,152 branches and 4,422 banking units as of June 30, 2021, the network now has 1,190 branches and 4,450 banking units. As of June 30, 2022, there were 429 ATMs overall, down from 487 on June 30, 2021. The bank now employs 61,247 workers, an increase of 60,211 over the quarter.

In Deedargunj, Patna, the bank opened its first ever money chest in July. This will assist the Bank in managing cash for the city’s branches and ATMs.