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Stock gains reaching an all time high: Bandhan Bank

Bandhan Bank Ltd. became the top performer on the Nifty Bank after BofA Securities initiated coverage on the private lender with a bullish investment recommendation.

Bandhan Bank’s core MFI business comprises 65% of its overall loan book, which according to BofA is one of the biggest and best in India.

This comes as microlenders saw their asset quality deteriorate over the past year on lower repayment and collection levels during the pandemic.

On February 9, after hitting fresh record highs in the early trade, Indian indices ended with marginal losses and also snapped 6-day winning streak.

Over the past few cycles, Bandhan bank has also successfully diversified its MFI book outside east India.

The rest of India business now contributes to less than 20% of its MFI book.

Shares of Bandhan Bank gained as much as 4.1% on Friday to Rs 422 a piece.

The stock is up for the second straight day and of the 25 analysts tracking the company, 21 have a ‘buy’ rating and two each suggest a ‘hold’ and a ‘sell’.

BofA also sees key growth potential for the bank in its retail and SME verticals, which are closely aligned to its MFI business.

The focus in the SME business is on capturing wallet share of its vintage MFI customers as they grow their businesses.

Retail focus centres around micro-housing and other retail asset products.

Bandhan’s dominant presence and superior execution in its core business of MFI (microfinance institution) offer a competitive advantage in its ability to fund its growth ambition.

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