Short Notes on Bandhan Bank Stock
(Please look for P.S. dated 28Apr2023 at the end of this article)
(This
is just for information purpose only; this should not be construed as
investment advice though the author is a CFA Charterholder. Readers
should consult their own investment advisor before making any investment
decisions.)
I've been watching the business and stock market gyrations of Bandhan Bank Limited even since its initial public offering (IPO) on Indian bourses five years ago.
Its business has undergone various vicissitudes due to problems surrounding micro-finance in India, downturn in rural family incomes and regulatory issues. The fortunes of its business are reflected in its stock price volatility in the past five years. See the below table for events and volatility >
Bandhan Bank Limited at current market price of Rs 220 (market cap Rs 35,400 crore) is attractively priced in my opinion -- though there are concerns about its recovery in micro-finance sector and its volatile quarterly results.
Three weeks ago, its price was at a 50 percent discount to its IPO price of Rs 375 (the stock was listed on 27Mar2018). These are the difficult times for the stock at which time one should pick up the stock if investors are confident about the company, its promoters and its business model. Patience is needed with the stock.
Companies and / or banks go through tough times -- this is a feature, not a bug in free market economies (I mean relatively free markets). The promoters have a good track record in my opinion. All the worst opinions / views about the stock are priced in -- and I reckon any further downside from current price level is limited.
The bank is promoted by Chandra Shekhar Ghosh. The promoters' holding in the bank is a little less than 40 percent, foreign investors hold 32 percent, domestic financial institutions hold 13 percent and the rest is held by public.
Three weeks ago, its price was at a 50 percent discount to its IPO price of Rs 375 (the stock was listed on 27Mar2018). These are the difficult times for the stock at which time one should pick up the stock if investors are confident about the company, its promoters and its business model. Patience is needed with the stock.
Companies and / or banks go through tough times -- this is a feature, not a bug in free market economies (I mean relatively free markets). The promoters have a good track record in my opinion. All the worst opinions / views about the stock are priced in -- and I reckon any further downside from current price level is limited.
The bank is promoted by Chandra Shekhar Ghosh. The promoters' holding in the bank is a little less than 40 percent, foreign investors hold 32 percent, domestic financial institutions hold 13 percent and the rest is held by public.
One could check the valuation of the bank versus its peers in data websites. From screener.in and ticker.finology.in >
Non-performing asset (NPA) ratios are slightly higher for the bank compared to other comparable banks. I think the bank's troubles in recovery in North Eastern states will subside in the next one or two quarters. Loan growth has improved in recent quarters.
Bandhan Bank's business model is such that it was impacted more by issues in India's rural economy, like, the cash ban (demonetisation), IL&FS crisis and draconian COVID-19 lockdowns. The bank's exposure is more toward micro-finance.
Bandhan Bank's business model is such that it was impacted more by issues in India's rural economy, like, the cash ban (demonetisation), IL&FS crisis and draconian COVID-19 lockdowns. The bank's exposure is more toward micro-finance.
- - -
P.S.: 28Apr2023 Care Ratings - Care Edge report - Microfinance (MFI) industry beats COVID-19 blues, likely to grow by 25 percent in FY 2023-24
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References:
Tweet thread 27Mar2018
Tweet dated 27Mar2023
Tweet dated 23Apr2023
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
Twitter @vrk100
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