Bandhan Bank shares surge 13% post robust Q1 results

Shares of Bandhan Bank hit the day's high at 13% on Monday after the private lender's April-June quarter financial earnings beat estimates.

Shares of the private sector bank opened a gap-up today and hit ₹215.50, up 13% compared to the previous closing session. At the current share price of ₹214.15, up 11.28% (11.28 AM), the scrip is trading lower compared to a 52-week-high of ₹263.15 touched on January 4, 2024. With today's rally, its m-cap has also increased to ₹34,490.87 crore.

Bandhan Bank's profit for the quarter ended June 30, 2024, stood at ₹1,063 crore compared to ₹721 crore, registering a growth of 47% YoY. The bank’s RoA (return on assets) stood at 2.5% and RoE (return on equity) was 18.8% for the quarter on an annualised basis.

The net interest income (NII) as of Q1 FY25, stood at ₹3,005 crore compared to ₹2,491 crore as of Q1 FY24, a growth of 21%, while net interest margin was recorded at 7.6% year-on-year. The bank’s net revenue as of Q1 FY25 came in at ₹3,533 crore vs ₹2,876 crore in Q1 FY24, a growth of 23%.

The provisions (other than tax) and contingencies charged to the profit and loss for Q1 FY25 were at ₹523 crore compared to ₹602 crore in Q1 FY24. In terms of asset quality, Bandhan Bank says its gross non-performing assets (NPA) improved YoY to 4.2% in Q1 FY25 compared to 6.8% in Q1 FY24, while the net NPAs were at 1.1% in Q1 FY25 vs 2.2% in Q1 FY24.

The bank's deposits as of Q1 FY25 were at ₹1.33 lakh crore as against ₹1.08 lakh crore in the previous year -- a growth of 23% YoY and a decline of 1.5% QoQ, while CASA deposits stood at ₹44,456 crore and CASA ratio at 33.4%.

As of June 30, 2024, the bank's gross advances stood at ₹1.26 lakh crore against ₹1.03 lakh crore in the previous year, up 22% YoY. As of Q1 FY25, the bank’s distribution network spanned 6,300 outlets, with over 77,500 employees.

Bandhan Bank in its annual report says it is exploring robotic process automation (RPA) and artificial intelligence (AI) to drive efficiency to optimise costs but deliver superior value to customers. "Presently, around 95% of the total general banking transactions occur digitally, with digital registrations recording a 21% year-on-year increase. Additionally, digital transaction volume has surged by 52% year-on-year, while UPI transactions have grown by an impressive 51%," its MD and CEO Ratan Kumar Kesh says in the company's annual report released on July 27.

Cheering the Q1 results, CLSA raised the target price on Bandhan Bank stock to ₹240 from ₹210 earlier, while giving an "Outperform" rating. Other key agencies including Jefferies and Kotak Institutional Equities also rated its stock as "Buy". Emkay, however, said it retained "reduce" rating, with the target price of ₹175 per share (1xJune-26E ABV), citing concerns regarding micro-finance space stress.