Stock in Action - Bandhan Bank 11 October 2024

Highlights

1. Bandhan Bank's share price declined over 15% year to date in 2024, making it one of the underperformers in the Indian banking sector.

2. Bandhan Bank's financial performance has shown growth over the past year.

3. Bandhan Bank's quarterly earnings report highlighted an improvement in net profit in the last quarters reaching ₹1063Cr in June

4. Bandhan Bank's stock analyst forecasts positive trends for the future.

5. Bandhan Bank's share price has been consolidating between ₹180 and ₹200 since 2024

6. Bandhan Bank stock has underperformed the market, delivering a negative return of over 17% in the past year.

7. Bandhan Bank is currently trading at ₹205.75 showing a 9.62% increase as of 1:47 Pm on NSE.

8. Bandhan Bank shares jumped over 9% after the Reserve Bank of India approved Partha Pratim Sengupta as the new Managing Director and CEO of the bank. This leadership change has sparked optimism among investors, driving the stock higher.

9. International brokerage firm Jefferies has reiterated its buy rating for Bandhan Bank setting a target price of ₹240 per share.

10. As per the June quarter filings the company has a 39.98% promoter holding, 15.06% DII holding and 28.25% foreign institutional investor (FII) holding.

Why is Bandhan Bank in the News today?

Bandhan Bank shares jumped over 9 percent today following the Reserve Bank of India approval of Partha Pratim Sengupta as the new Managing Director and CEO of the private bank.

Sengupta accepted the role on 9 October 2024 and confirmed on 10 October that he would resign from his other commitments to meet the RBI's requirements. His three year term is expected to start by 10 November 2024.

The appointment will be officially confirmed after receiving approval from the bank's Nomination and Remuneration Committee.

Analyst's View on Bandhan Bank

International brokerage Jefferies has maintained a buy recommendation for Bandhan Bank, setting a target price of ₹240 per share following the appointment of Partha Sengupta as Managing Director and CEO. 

Jefferies views Sengupta's experience in West Bengal a crucial market for the bank as a significant advantage that will strengthen its position. Additionally, Bandhan Bank is set to receive ₹320 crore from a CGFMU claim including ₹230 crore in recoveries which is expected to boost its profitability and credibility. With past challenges resolved and the stock trading at an attractive valuation of 1.1 times FY26 adjusted price to book ratio, Jefferies encourages investors to buy the stock.

Similarly, Goldman Sachs has noted that the appointment of Sengupta and the resolution of the CGFMU claim have removed near term uncertainties allowing the focus to shift to the bank's fundamentals. This change reassures investors about the continuity of business momentum, making Bandhan Bank a more appealing investment option.

Bandhan Bank Vs Nifty

Bandhan Bank's stock has experienced a notable rise of 8.1% over the past five trading sessions and a 5.42% return in the last month with an increase of almost 13% over the past six months. However, it has faced challenges erasing 17% of investor's wealth in the past year.

In comparison benchmark Nifty 50 managed to gain 0.14% in the past month and approximately 11% in the last six months. Nifty 50 has delivered a 26% return over the past year indicating stronger overall market performance and resilience compared to Bandhan Bank. This highlights that while Bandhan Bank shows positive short to medium term trends it must address its long term challenges to regain investor confidence and align with the broader market's growth.

Conclusion

Bandhan Bank has seen recent gains, particularly with a 9% surge following the appointment of Partha Pratim Sengupta as the new Managing Director and CEO. Despite showing short term positive trends such as an 8.1% increase over the past five trading sessions the stock remains down 17% year to date and has struggled compared to Nifty 50 index which rose 26% in the past year.

However analysts including Jefferies and Goldman Sachs maintain a bullish outlook, citing improved fundamentals and strategic leadership suggesting potential for recovery and growth in investor confidence moving forward.