Bandhan Bank shares trading near 52-week low; time to buy?

Shares of Bandhan Bank were trading marginally higher than the 52-week low level in early trade today. Bandhan Bank stock stood at Rs 225.60, down 0.31 per cent against the previous close of Rs 226.30 on BSE.  In the current session, Bandhan Bank stock was trading 2.78 per cent higher than the 52 week low of Rs 220.05 hit on November 11, 2022.

Bandhan Bank shares trade lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The large cap stock has lost 27.36 per cent in one year and lost 10.63 per cent since the beginning of this year.

A total of 0.43 lakh shares of the lender changed hands, amounting to a turnover of Rs 97.22 lakh on the BSE. Market cap of the bank fell to Rs 36,340 crore on the BSE.

Weaker-than-expected Q2 earnings have triggered a selloff in the Bandhan Bank stock this month. The share, which closed at Rs 270.95 on October 27, is trading at Rs 226 today, translating into a loss of 16.60 per cent during the period.

Earnings of the lender were announced on October 28. The private sector lender reported a net profit of Rs 209 crore in Q2 against Rs 3,009 crore loss in the year ago period. The Q2 show was boosted by a sharp fall in provisions and a rise in net interest income.

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However, profit slipped 76.39 per cent from Rs 886.50 crore in the June quarter. The Q2 provisions were almost double the provisions for the June quarter, leading to negative sentiment around the stock. Net interest income (NII) of Bandhan Bank declined 12.8% (QoQ) to  Rs 2,193 crore, while the net interest margin (NIM) of the bank contracted 100 basis points QoQ to 7%  lower than 7.6% in the similar previous period.

After the Q2 earnings, Goldman Sachs downgraded the stock to 'neutral' and cut the price forecast by as much as 28%.

Pavitraa Shetty from Tips2trades said, "During the earnings season so far, where majority of the banks have posted stellar Q2FY23 results, Bandhan Bank results were below average due to poor margins neutralised by an increase in other income. Consistently poor return ratios have led to this slump in Bandhan Bank's stock price & traders should only buy this stock on daily close above 230 for near term targets of 260 & 274 ."

In a report dated November 2, 2022, brokerage Geojit has assigned a buy rating on the stock with a target price of Rs 282. “The stock is currently trading at attractive valuations, close to its 52-week low share price. Hence, we upgrade our rating on the stock to BUY with a revised target price of Rs 282 based on 1.8 times FY24E book value per share,” said Geojit.

Tirthankar Das,technical & derivative analyst, retail, Ashika Stock Broking said, "The share price of Bandhan Bank has been on a sequential decline since January 2021 and the slower pace of retracement suggests inherent weakness in the stock and close below the previous swing low of December 2021 suggests further negative bias. Immediate resistance for the stock is seen from the 20WEMA at 285. However, the stock is seen rebounding after a base formation at the lower band of the falling channel since September 2020, thus providing a favourable risk-reward setup. On the oscillator front, in the daily time frame, the 14-period RSI is seen rebounding from the oversold territory and is at the cusp of generating a buy signal, thus validating an intermittent pullback. However, the sustainability of this remains doubtful. One can expect a pullback towards 250-260 (50EMA). However, on the lower end, breach of the 215 level would continue to maintain a negative outlook on the stock."

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