Bandhan Bank Ltd (BANDHANBNK): Microfinance Pioneer Turning Corner
Bandhan Bank Ltd is a Kolkata-headquartered private sector bank that began as India's largest microfinance institution and evolved into a universal bank post its 2015 licensing. It focuses on financial inclusion, especially in underserved semi‑urban and rural markets, with ~6,300 outlets and 75,000 employees as of March 2025.
📊 Q4 FY25 & FY25 Financial Snapshot
- Q4 Net Profit: ₹318 cr, up ~483% YoY from ₹55 cr, driven by lower provisions.
- Q4 Net Revenue: ₹3,456 cr (-3% YoY); NII: ₹2,756 cr (-4% YoY); NIM: 6.7%.
- FY25 PAT: ₹2,745 cr (+23% YoY) on net revenue ₹14,458 cr (+16%) and NII ₹11,491 cr (+11%).
- Asset Quality: GNPA 4.7%, NNPA 1.3%; PCR ~86.5%.
- Deposits: ₹1.51 lakh cr (+12% YoY); CASA: ₹47,437 cr (31.4%).
- Advances: ₹1.37 lakh cr (+10–11% YoY); retail advanced ~98%, wholesale +35%, housing +11%.
💹 Stock & Market Sentiment
- Price movement: Shares around ₹165–₹170 in early July 2025, slightly down post earnings.
- Broker stance: ICICI Securities downgraded to “Add” with ₹185 target.
- Valuation concerns: High P/E (~60×); Reddit investors cite weak EPS growth and bank’s NPA exposure.
🔍 Reddit Insight (Community Sentiment)
> “Bandhan bank has not been able to justify the valuations with EPS growth… NPA issues… margins impacted” > “The stock lost confidence… high NPA… fintech competition… it can bounce back… will take time.”
⚖️ Strengths & Risks
| Strengths | Risks |
|---|---|
| Strong microfinance legacy with 6,300 rural outlets and wide deposit base | High GNPA (~4.7%) and vulnerability in EEB/micro‑loan segments |
| Profit rebound with provision lowering and cost efficiencies | Pressure on NII/NIM due to rising costs and provision volatility |
| Healthy growth in deposits and advances (10–12%) | Rich valuation (60× P/E) not matched by EPS growth |
| Strong PCR (~86%), bolstering loan-loss buffers | SBFS and fintech may erode microfinance market share |
🧭 Outlook & Catalysts
- Sustained earnings recovery dependent on micro/lending performance and asset quality improvement.
- Rate cuts or moderation by RBI could improve NIM and borrowing costs.
- Fintech competition and EEB book performance to determine future growth.
- Upcoming triggers: FY26 guidance, asset quality trends, dividend or capital actions.
✅ Conclusion
Bandhan Bank, once a microfinance flagship, is turning hopeful with a strong Q4 turnaround and deposit-led growth. That said, high valuations and legacy NPA issues demand close monitoring. Investors bullish on financial inclusion and micro-lending may consider small exposure, but risk-averse players may wait for further asset-quality stability and earnings visibility.
