While many private and public sector bank stocks have rallied between 50 and 5 per cent this year, shares of private bank Bandhan Bank have fallen around 38 per cent since their May peak till yesterday (Nov 18). It has fallen by 19.75% in just 30 days. What is the reason for the decline? Let’s see if we can buy it at the current price.
At the end of last October, Bandhan Bank released its September quarter results. Out of which net profit is Rs.209 crore and provisions are Rs.1,280 crore. The provision for these provisions was Rs 642 crore in the June quarter. It has doubled in the September quarter. Due to this, Bandhan Bank’s profit fell by 76.4% compared to the June quarter. 35.64 percent of Bandhan Bank’s shareholders were foreign investors. Many of them slipped away. Currently, FII’s shareholding has fallen below 30 percent. At the same time, some mutual funds have increased their investment in Bandhan Bank.
Similarly, net interest margin declined by 0.6% in the current quarter. Bad loans worth Rs.3535 crore have been written off. This has also affected the net interest margin. As a result, the loan portfolio of the bank has decreased from Rs.58,100 crore to Rs.53,920 crore. Due to this, the series has been in decline since November.
What the experts say…
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“Despite credit growth being strong, sales are high as quarterly results are below average. Currently, the sale is seen up to Rs.210. Bandhan shares can be bought at that time if they close above Rs.235. Then it may go from Rs 256 to Rs 275.” Says Pavitra Shetty of Tips2Trades.
Parvesh Kaur, technical analyst at Swastika Investmart said, “Rs 200 is a strong and important psychological support level on the downside. It can go up to Rs 230 from this level.” He said. Accordingly, short-term investors can trade with Rs.200 as stoploss.
ICICI Securities has green flagged that long-term investors can buy at the current price and are reasonably priced. It has said that the stock price of Bandhan will rise by 70% to reach Rs.365 in a year.
Axis Securities has given the company a current rating of positive and a buy recommendation. The company has set a target price of Rs.305.
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