Buy Bandhan Bank, target price Rs 450: Motilal Oswal

Buy Bandhan Bank, target price Rs 450:  Motilal Oswal

Motilal Oswal has buy call on Bandhan Bank with a target price of Rs 450. The current market price of Bandhan Bank Ltd. is Rs 403.9.

Bandhan Bank Ltd., incorporated in the year 2014, is a banking company (having a market cap of Rs 63770.00 Crore).

The Bank reported a Gross Non Performing Assets (Gross NPAs) of Rs 873.97 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 262.55 Crore (.00% of total assets). For the quarter ended 30-09-2020, the company reported a Standalone Interest Income of Rs 2792.55 Crore, up 6.51 % from last quarter Interest Income of Rs 2621.96 Crore and up 17.82 % from last year same quarter Interest Income of Rs 2370.15 Crore. The bank reported net profit after tax of Rs 920.01 Crore in latest quarter.

Investment Rationale
Bandhan reported strong business trends, aided by the festive season and improved economic activity, particularly in rural India. It continues to demonstrate strong deposit performance, led by retail deposits, with the CASA mix improving to 43% and retail deposits mix to 81%. Furthermore, the bank holds COVID-related / excess standard provisions of INR17.4b to manage higher delinquencies over FY21. It expects LGDs to remain lower (v/s those of peers) given Bandhan’s strong market share and higher unique customer base. It maintains a Buy rating, with TP of INR450 (3.0x Sep’22E BV).

Promoter/FII Holdings
Promoters held 40 per cent stake in the company as of Sept 30, 2020, while FIIs held 32.2 per cent, DIIs 12.7 per cent and public and others 15.1 per cent.

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