StocksMarket.in

Buy Bandhan Bank; target of Rs 650: ICICI Direct

January 16
17:25 2020

ICICI Direct’s research report on Bandhan Bank

Led by unrest in Assam (16.4% of MFI book), collection efficiency in the state declined to below 80%. It revived to 93.6% in December 2019 (earlier run rate of 97-98%). The bank has not seen substantial slippages yet from the micro finance book. However, it has provided additional provision of Rs 200 crore in lieu of the exposure. The asset quality of the merged entity saw marginal deterioration with ~17 bps QoQ increase in GNPA ratio at 1.93%, primarily led by change in NPA recognition norms for Gruh Finance book.

Outlook

Therefore, we downgrade our estimate marginally and expect earnings to grow at 26% CAGR in FY20-22E. Accordingly, we revise our target price to Rs 650/share, valuing the stock (post merger) at 19x FY22E EPS (4.5x FY22E BV). We maintain BUY rating.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

Related Articles

Archives