Bandhan Financial institution tanks 7% as analysts lower FY23 EPS estimates by as much as 40%

Shares of Bandhan Financial institution took a beating, falling over 7 per cent in Monday’s commerce after a pointy rise in September quarter slippages triggered an as much as 40 per cent drop in FY23 earnings per share (EPS) estimates for the non-public lender.

Analysts famous that slippage for Bandhan Financial institution had been at an all-time excessive of 21 per cent. The financial institution wrote-off Rs 3,500 crore or 4 per cent of loans, its second largest write-off after 2 per cent of loans in Q4FY21.

“Regardless of a tedious slippage scenario, the SMA pool stays unchanged sequentially, implying excessive slippage even in Q3FY23,” stated Nuvama Institutional Equities, which has lower its EPS estimate for Bandhan Financial institution by 40 per cent for FY23 and 19 per cent for FY24.

“We lower goal a number of sharply to 1.8 occasions from 2.2 occasions to replicate the excessive frequency of weak enterprise cycles. We downgrade from ‘BUY’ to ‘HOLD’ regardless of the inventory’s current underperformance and lower goal worth to Rs 280 from Rs 370,” the brokerage stated.

The scrip fell 7.20 per cent to hit a low of Rs 246.10 on BSE. 

Motilal Oswal stated it stays watchful of asset high quality and the excessive SMA guide, which may preserve credit score price elevated. The administration has raised its credit score price steering for FY23 to three per cent from 2.5 per cent earlier and guided at decrease than development development on account of tighter underwriting. Motilal Oswal has lower its FY23 EPS earnings estimate by 18 per cent and FY24 estimate by 11 per cent.

Kotak Institutional Equities has lower its truthful worth on the inventory to Rs 300 from Rs360 earlier because it values the inventory  at 2.2 occasions guide worth and 9 occasions June 2024E EPS.

The brokerage stated it has lower its estimates sharply to replicate weaker income development and better provisions.

The scrip has fallen 27 per cent within the final six months and Kotak stated buyers’ lack of conviction is mirrored within the inventory’s underperformance in current quarters.

“Our constructive ranking primarily is a play that the asset high quality would get well, the deposit franchise is robust regardless of these challenges and the excessive RoE could be finally get mirrored in larger multiples. Nonetheless, timing this restoration has not been simple,” it stated.

Additionally learn: Each mom is a CFO, took primary classes from her: Bandhan Financial institution MD & CEO