Bandhan Bank Stock Cracks 8% After Receiving Rs 801-cr Bid; What Should Investors Do?

Bandhan Bank Share Price: Shares of Bandhan Bank Ltd. slumped on Thursday, December 22, tracking weak sentiment in the domestic equity market. The private lender fell nearly 8 per cent to Rs 224.4 in Thursday’s intraday trade after the company said that it has received a binding bid of Rs 801 crore from an asset reconstruction company (ARC) for the written-off portfolio with an outstanding of Rs 8,897 crore.

“We would like to inform that pursuant to the approval of the Board of Directors of the Bank to transfer Group Loan and SAL written off portfolio to Asset Reconstruction Company), the Bank has received binding bid from an ARC, amounting to Rs 801 crore,” said Bandhan Bank in a stock exchange filing.

SBAL is Small Business and Agriculture Loan.

“The Bank shall go for bidding as per Swiss challenge method and decision of sale shall be taken as per extant guidelines governing Swiss challenge method and the relevant Policy of the Bank,” added Bandhan Bank.

At 11.02 am, the scrip was trading 7.6 per cent lower at Rs 224.6 over its last day’s closing price of Rs 243 apiece. The stock has also fallen nearly 20 per cent in the last six months, while it has plunged about 10% year-to-date.

In Q2FY23, Bandhan Bank reported a net profit of Rs 209 crore as against a Rs 3,009 crore loss in the year-ago period. The bank made Rs 1,280 crore provisions in the September quarter against Rs 5,614 crore in the year-ago period. The net interest income also rose 13.3 per cent to Rs 2,193 crore.

What Should Investors Do Now?

Global Brokerage firm Jefferies has recommended a ‘buy’ rating on Bandhan Bank with a target price of Rs 340 .

It noted that this is the company’s second positive non-performing loan(NPL)-recovery event after Rs 9.2 billion received from CGFMU (Credit Guarantee Fund for Micro Units) & another Rs15-20 billion can be expected in 1HFY24.

“This improves asset quality outlook & values are attractive at 1.8x FY24 adj PB,” the brokerage firm added.

As per Trendlyne data, the highest target price for the stock goes up to Rs 390, while the average target price estimate is Rs 311, which shows an upside potential of 34 per cent from the current market prices.

Out of the 21 analysts covering the stock, 14 have strong buy and buy ratings, six have hold ratings and one has a strong sell rating.

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