Bandhan Bank hits highest level since listing; up 56% against issue price
Shares of Bandhan Bank, which hit a new high of Rs 585, up 5% on Tuesday, was trading at its highest level since listing on March 27, 2018. The stock gained 54% over the issue price of Rs 375. Since April 26, post FY18 results, Bandhan Bank has outperformed the market by surging 16% after the private sector lender reported 21% year on year (YoY) growth in net profit at Rs 13.46 billion. Net interest income grew 26% at Rs 30.32 billion over the previous fiscal. Bandhan Bank is a unique business model of high yielding micro finance loan portfolio (94% priority sector fulfilment) and low cost deposit franchise with 34.3% CASA offered in the ambit of a commercial bank, according to analysts ICICI Securities. “Net interest margin (NIM) was at 9.8% for FY18. With low cost funds, we expect NIM to sustain at around 9% even as the bank starts building non-micro loans. Along with higher NIM, low operating cost at around 35% C/I ratio remains its key differentiator, high RoA driver. Its opex to AUM ratio was at 4% for FY18. We expect high RoA of 3.54%, RoE >20% to sustain. With almost double NIM, RoA vs. HDFC Bank & lower cost to income (C/I) ratio, with no legacy corporate portfolio pains, we believe Bandhan Bank will command higher premium to HDFC Bank,� the brokerage firm said in recent report. The brokerage firm had initiate coverage with a BUY recommendation with 12 month target price of Rs 600 per share.
Article Source - BS