On Friday, October 11, 2024, shares of Bandhan Bank Ltd experienced a remarkable surge, rising by 9.15% to reach Rs 204.90. This increase has propelled the bank’s market capitalization to over Rs 33,000 crore. The spike in share price follows the Reserve Bank of India’s (RBI) approval of Partha Pratim Sengupta as the new Managing Director and Chief Executive Officer (MD & CEO) of Bandhan Bank. This appointment is expected to bring renewed confidence in the bank’s leadership and strategic direction.
The RBI’s endorsement of Sengupta marks a significant change in leadership for Bandhan Bank. Sengupta brings nearly 40 years of banking experience, having held various senior positions including Deputy Managing Director at the State Bank of India (SBI) and MD & CEO at Indian Overseas Bank. His extensive background is seen as a stabilizing factor for Bandhan Bank, which has faced challenges in recent years.
Analysts have reacted positively to this news. Kotak Institutional Equities has given a ‘buy’ rating on the stock with a target price of Rs 250, while Nirmal Bang and Nuvama Institutional Equities have issued ‘hold’ ratings with target prices of Rs 200 and Rs 242, respectively. Emkay Global Financial Services has a more cautious stance with a ‘reduce’ rating and a target price of Rs 175.
The market’s optimism is not solely based on leadership changes. Bandhan Bank recently reported strong growth in its financial metrics. For instance, total deposits surged by 27% year-on-year, reaching approximately Rs 1.42 lakh crore in the September quarter of FY25. Loans and advances also grew by 21.4%, indicating robust demand for credit.
Moreover, the bank provided an update regarding its claims under the Credit Guarantee Fund for Micro Units (CGFMU) scheme. As of March 31, 2024, the total claim payout assessed was approximately Rs 1,231.29 crore, with Rs 916.61 crore already received in December 2022. This clarity on financial matters is expected to enhance investor confidence.
In addition to these developments, analysts suggest that the appointment of Sengupta may alleviate concerns regarding asset quality pressures faced by microfinance institutions (MFIs), including Bandhan Bank itself. JM Financial Services noted that while microfinance remains under stress, Bandhan Bank has grown at a slower pace compared to its peers, potentially mitigating further risks.
Goldman Sachs also expressed optimism about the new management structure, suggesting that it removes uncertainties surrounding business continuity and momentum post-management change. They maintain a ‘neutral’ rating on the stock with a target price of Rs 222.
The market’s reaction today reflects a broader trend within the banking sector, where positive earnings reports and strategic appointments have generally led to increased investor interest. Notably, shares of other major banks like HDFC and ICICI have also seen gains recently, contributing to an overall positive sentiment in the financial markets.
Market Performance Overview
| Date | Share Price (Rs) | Change (%) | Market Cap (Cr) |
|---|---|---|---|
| October 11 | 204.90 | +9.15 | 33,000 |
| Previous Close | 187.75 |
Despite today’s gains, it’s important to note that Bandhan Bank’s stock has experienced fluctuations over the past year, dropping by approximately 18% year-to-date but gaining about **10% over the last six months.
Investors are now closely watching how Sengupta’s leadership will shape Bandhan Bank’s strategic direction moving forward. The focus will likely shift back to fundamental performance metrics as the bank navigates through current market conditions.
