The share price of Bandhan Bank declined over 3 percent in early trade on Monday after the private lender reported a sharp 80.1 percent fall in profit for the March quarter of FY21 at Rs 103 crore as against Rs 517.3 crore in the year-ago quarter.
The bank's net interest income (NII) during Q4FY21 grew by 4.6 percent YoY to Rs 1,757 crore, while the net interest margin (NIM) was at an all-time low of 6.8 percent.
Here's what brokerages have to say on the bank's Q4 performance and the stock:
CLSA downgraded the stock to Underperform from Outperform and cut the target price to Rs 300. It also reduced estimates further by 10-33 percent.
Bandhan’s 4QFY21 performance was weak with a miss on PPOP/PAT due to high provisions. "While collections picked up, we estimate stress book remained flat versus December 2020," CLSA said.
"While +6.5% of PPOP/assets does provide the bank with P&L cushion to absorb wave-2 shock, near-term uncertainty especially with wave-2 remains high," CLSA said.
The brokerage said it prefers large banks such as ICICI Bank, Axis Bank and SBI.
Jefferies maintained a Buy call and reduced the target price to Rs 400 per share from Rs 470 earlier on higher NPLs and risks from COVID second wave.
The brokerage said the bank's Q4 earnings disappointed by higher slippages, and it faces credit risks from lockdowns. It cut earnings estimates by 13 percent for FY22 and 11 percent for FY23.
Credit Suisse has a Neutral rating and cut the TP to Rs 330 per share from Rs 360 earlier.
The brokerage believes that the uncertainty remains and overdue and credit costs are likely to remain elevated. It cut EPS estimate by 7 percent.
JPMorgan has an Overweight call with a target of Rs 400 per share.
"Accelerated provisioning drives a miss. Collections show broad-based improvement," JPMorgan said. It expects better performance in F22.
"Bandhan reported a weak performance, affected by elevated provisions and higher interest reversal. We expect asset quality trends to remain under pressure thus, we estimate credit cost at 4 percent of loans for FY22. We cut our earnings estimate by ~11 percent/6 percent for FY22/FY23," Motilal Oswal said.
The brokerage maintained a Neutral rating with a TP of Rs 335 per share.
ICICI Securities maintained a Buy call but cut the target price to Rs 465 from Rs 501.
"The portfolio vulnerability comes to the fore, while asset quality toll in Assam and West Bengal marred Q4 earnings. The bank’s contingency buffer utilised in Q4FY21, however, the bank didn’t pull back on growth despite a challenging year on asset quality," the brokerage said.
It revised the credit cost estimate to 3.4 percent/2.0 percent. The brokerage cut earnings estimates by 23 percent for FY22 and 6 percent for FY23.
At 10:30 am, the shares of Bandhan Bank recovered from losses, trading 0.67 percent higher at Rs 299.00 apiece on the BSE.
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