Bandhan Bank Share Price jumped 5 percent on Friday as the stock has given a breakout in the recent times. Bandhan Bank has touched 52-week high and low of Rs 263 and Rs 169 respectively. The private bank has been growing its business and keeping NPAs at a lower levels compared to peers.

Market analysts from Axis Direct and KRChoksey currently have BUY Rating for Bandhan Bank Stock and target has already been met for Axis Direct recommendation.

Bandhan Bank has recently attracted attention from research house KRChoksey, which has issued a BUY recommendation with an upgraded target price of Rs 217. The recommendation follows a robust performance by Bandhan Bank in Q1FY25, surpassing estimates due to lower operating income and provisions. With a strategic shift toward secured loans and a focus on diversifying its product mix, the bank aims to reduce concentration risks and expand its geographical presence. Strong asset quality improvement, driven by lower slippages and healthy recoveries, adds further credibility to the recommendation, suggesting promising growth potential for the stock.

Healthy Q1FY25 Performance Outpaces Estimates

Strong Quarterly Performance Beats Expectations
In Q1FY25, Bandhan Bank posted results that exceeded KRChoksey’s projections, driven by reduced operating expenses and provisions. The bank demonstrated decent business momentum during the quarter, showcasing its commitment to enhancing its product mix, particularly through an increased focus on secured loans. This shift is intended to diversify its offerings and minimize concentration risks, reflecting the bank’s proactive strategy to address evolving market dynamics.

Focus on Product Mix and Geographical Diversification

Diversification to Reduce Concentration Risk
A key pillar of Bandhan Bank’s strategy is its focus on diversifying its product portfolio and expanding its geographical footprint. By leaning toward secured loans, the bank is aiming to balance its loan book and reduce its dependence on certain segments or regions. This strategic pivot is crucial for long-term stability, particularly in an increasingly competitive market environment.

Asset Quality and Recoveries

Improved Asset Quality Amid Challenges
Bandhan Bank’s asset quality saw marked improvement, despite the seasonal challenges posed by the general elections. The bank’s gross non-performing assets (GNPA) stood at 4.23% as of June 30, 2024, a notable improvement from 6.8% as of March 31, 2024. This was driven by healthy recoveries and lower slippages, indicating strong risk management practices. Additionally, the net non-performing assets (NNPA) improved to 1.15% by the end of Q1FY25, compared to 2.18% a year earlier, further solidifying the bank’s financial health.

Target Price Revision

Upgrade in Target Price to Rs 217
Based on Bandhan Bank’s robust financial performance and improved asset quality, KRChoksey has revised its target price to Rs 217 per share, up from Rs 193. This revision is underpinned by assigning a P/ABV multiple of 1.3x to the adjusted book value of Rs 155 per share for FY26E. The target price implies an upside potential of 7.4% over the current market price (CMP), positioning the stock as a BUY for investors seeking growth opportunities in the banking sector.