Shares of Bandhan Bank surged more than 9 per cent during the trading session Friday after the Reserve Bank of India (RBI) approved the appointment of Partha Pratim Sengupta as MD & CEO of the private lender. The company informed about the same through an exchange filing after the market hours on Thursday.
RBI has granted its prior approval for the appointment of Partha Pratim Sengupta as Managing Director & Chief Executive Officer of the bank for a period of three years with effect from the date of taking charge, which shall not be later than November 10, 2024, said the lender in its exchange filing.
Partha Pratim Sengupta is an experienced banker, who has nearly four decades of experience in the banking industry. He has worked in different geographies, across both retail and corporate banking. He has served as Deputy Managing Director and Chief Credit Officer of State Bank of India (SBI) of the Bank. He then took over as Managing Director & CEO of Indian Overseas Bank.
Shares of Bandhan Bank Ltd rose 9.15 per cent to Rs 204.90 on Friday, commanding a total market capitalization above Rs 33,000 crore. The scrip had settled at Rs 187.75 in the previous trading session. However, the stock has gained 10 per cent in the six months, while it has dropped 18 per cent on the year-to-date basis.
Kotak Institutional Equities has a 'buy' rating on the stock with a target price of Rs 250. Nirmal Bang and Nuvama Institutional Equities have a 'hold' rating on Bandhan Bank with target prices of Rs 200 and Rs 242, respectively. On the other hand, Emkay Global Financial Services had a 'reduce' rating on the stock with a target price of Rs 175.
Following the announcement, CLSA said that focus now will be back on fundamentals as the key overhang is gone. "Near-term delinquency outlook for MFI is benign but this is mostly already in estimates and its price," it added with an expectation of re-rating in the stock post the new appointment. It has an outperform rating on the stock with a target price of Rs 200.
In another exchange filing, Bandhan Bank said that the National Credit Guarantee Trustee Company (NCGTC) has completed the detailed forensic audit of claims made by the bank under the credit guarantee fund for micro units (CGFMU) scheme, and assessed the total claim payout to the Bank under the CGFMU scheme as Rs 1,231.29 crore as on March 31, 2024.
Bandhan Bank had already claimed and received an amount of Rs 916.61 crore from NCGTC in December 2022 of the aforementioned amount. Considering that the first claim has been settled to the extent of Rs 916.61 crore, final claim payout as on March 31, 2024 stands at Rs 314.68 crore, Bandhan Bank said in a statement.
Clarity on leadership should get the focus back on the bank’s fundamentals and strategic direction to be undertaken going ahead. While microfinance as a space remains under asset quality pressure, we believe that Bandhan Bank has grown meaningfully slower than rest of the industry in this cycle which should mitigate incremental stress, said JM Financial Services.
"We will review our estimates post Q2FY25 results. The stock currently trades at inexpensive valuations of 1.0 times FY26e P/BV and offers attractive risk-reward in our view, it added maintaining a 'buy' with a target price of Rs 260," the brokerage said.
Another overseas brokerage Jefferies said that Bandhan Bank's new CEO comes with a strong background and asset quality expected to behave better than other MFIs, albeit with some risks in FY25. "CGFMU recovery adds to credibility," said the brokerage with a target price of Rs 240 and a buy rating.
Goldman Sachs said that MD & CEO appointment and CGFMU claim resolution removes the near-term concerns and investors' uncertainty around the continuity in the business momentum post management change. It has maintained a 'neutral' rating on the stock with a target price of Rs 222.