Investors reacted cautiously to Bandhan Bank’s impressive Q4 profit announcement, resulting in a nearly 3% drop in its stock during intraday trading on the BSE on May 2. Despite opening at ₹168.05, a notable increase from the previous close of ₹165.65, the stock surged to an intraday high of ₹173.35 before reversing course and hitting a low of ₹161.10. By around 1:50 PM, shares were down 2.14%, trading at ₹162.10, even as the benchmark Sensex rose 0.51% to 80,649.
Bandhan Bank’s Q4 Performance
On April 30, Bandhan Bank reported a remarkable 483% year-on-year (YoY) increase in net profit for Q4FY25, amounting to ₹318 crore compared to ₹55 crore from the same quarter last year. However, the bank faced challenges, with a 30% YoY decline in net revenue, totaling ₹3,456 crore for the quarter.
- The bank’s net interest income (NII) fell by 4% YoY, standing at ₹2,756 crore.
- Additionally, the net interest margin (NIM) decreased to 6.7%, down 96 basis points YoY.
- Operating profit for this quarter was ₹1,571 crore, reflecting a 14.5% decline from ₹1,838 crore during the same period last year.
Stock Performance Insights
Over the past year, Bandhan Bank’s stock has faced significant pressure, declining nearly 12%. However, it has shown positive momentum recently, with a 13% rise in April following a 3.5% gain in March. The stock reached a 52-week low of ₹128.15 on February 18 but previously peaked at ₹222.30 on July 30.
Market Analyst Opinions
Brokerage firm Anand Rathi retained a buy rating for Bandhan Bank, setting a target price of ₹207, which implies a 25% upside potential. They noted that Q4 results exceeded expectations despite challenges in the Microfinance Institution (MFI) sector.
- Anand Rathi pointed out higher slippages compared to the prior quarter, yet a reduction in the Special Mention Account (SMA) book was a positive sign, indicating less incremental stress.
- The firm has observed that Bandhan Bank has been acknowledging stress in its EEB book consistently for 17 quarters, suggesting future stress might not be as severe as industry averages.
- They predict decent loan growth in the mid-teens, coupled with strong margins and easing credit costs, leading to robust medium-term earnings. Expectations are set for a return on assets (RoA) of approximately 1.5% and a return on equity (RoE) of around 12% for FY26/27.
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