Once a microfinance institution born in the heart of Kolkata, Bandhan Bank has traversed a volatile path from being a financial inclusion champion to a publicly listed commercial bank with pan-India aspirations. However, in recent years, the stock has tested investor patience due to asset quality concerns and market skepticism.
With improved credit performance, strategic recalibration, and a rebound in collections, the question resurfaces in April 2025: Is Bandhan Bank a turnaround story in the making — or are the risks still too steep to justify entry?
Let’s break it down.
1. The Origin and Business Model of Bandhan Bank
Established: 2015 (transitioned from NBFC-MFI to universal bank)
Founder: Chandra Shekhar Ghosh, a social entrepreneur who ran Bandhan-Konnagar since 2001 as an NGO
Headquarters: Kolkata, West Bengal
Listed on: BSE and NSE since March 2018
Business Segments:
- Microbanking (Individual Lending) – Primary growth driver; ~38% of total AUM
- Retail and SME Lending – Focus on secured loans
- Housing Finance – Managed through Bandhan Bank and acquired Gruh Finance assets
- Deposits – Mix of retail CASA and term deposits
Bandhan Bank’s core model emphasizes high-touch customer service in underserved rural and semi-urban areas, especially in East and North-East India.
Source: Bandhan Bank Annual Report 2022–23
2. Financial Snapshot (As of Q3 FY24)
| Metric | Value |
|---|---|
| Market Cap | ₹28,032 Cr |
| CMP (15 Apr 2025) | ₹174.80 |
| 52-Week Range | ₹166 – ₹252 |
| Net Interest Income (NII) | ₹2,504 Cr (Q3 FY24) |
| Net Profit | ₹732 Cr (Q3 FY24) |
| Net Interest Margin (NIM) | 7.1% |
| Cost to Income Ratio | 36.4% |
| Return on Equity (ROE) | 10.4% |
| Return on Assets (ROA) | 1.3% |
| Gross NPA | 7.3% |
| Net NPA | 2.1% |
| Capital Adequacy Ratio | 19.2% (Tier 1: 17%) |
Source: Tijori by Zerodha, Screener.in, Moneycontrol
3. Technical Chart and Price Action
| Technical Indicator | Value | Trend |
|---|---|---|
| 50 DMA | ₹181.25 | Below CMP |
| 200 DMA | ₹193.75 | Below CMP |
| RSI (14D) | 39 | Weak zone |
| MACD | Negative | Bearish |
The stock is trading below both its short- and long-term moving averages, suggesting it remains in a consolidation/bearish phase. Momentum indicators point to oversold conditions, making it technically ripe for a reversal — if fundamental support emerges.
Source: TradingView – Bandhan Bank NSE Chart
4. Peer Comparison: Where Does Bandhan Stand?
| Bank | CMP (₹) | Mkt Cap (₹ Cr) | GNPA (%) | NIM (%) | ROA (%) | P/B Ratio | P/E Ratio |
|---|---|---|---|---|---|---|---|
| Bandhan Bank | 174.80 | 28,032 | 7.3 | 7.1 | 1.3 | 0.93 | 11.9 |
| AU Small Fin Bk | 702.10 | 46,184 | 1.6 | 6.2 | 1.9 | 4.3 | 27.8 |
| Ujjivan SFB | 45.20 | 5,700 | 3.2 | 9.8 | 2.6 | 1.9 | 9.2 |
| IDFC First Bank | 83.70 | 57,328 | 2.1 | 5.8 | 1.3 | 1.3 | 17.4 |
Despite offering one of the best NIMs, Bandhan trades at below book value, reflecting market concerns over asset quality, regional concentration, and credit discipline.
Source: Screener.in, Tijori Finance
5. Sectoral Context and Regulatory Developments
- RBI’s tighter norms on provisioning for restructured loans have hit microfinance lenders hard
- Demand in East India — Bandhan’s key market — remains uneven post-cyclone and post-pandemic
- RBI’s increased scrutiny on MFI exposure limits (max 25% of total advances)
- Pressure to diversify geographically and reduce dependence on Assam, West Bengal, and Bihar
Source: The Hindu BusinessLine, RBI Notifications
6. What Are the Key Risks?
- High GNPA Levels: Despite improvement, asset quality is still under pressure, especially in microfinance
- Geographic Concentration: Over 60% of loan book exposure is in Eastern India
- Political Interference: Loan waivers and populist measures disrupt repayment culture
- Loan Book Contraction in MFI: New disbursals remain cautious in core markets
- Valuation Trap Possibility: Cheap valuations may persist if earnings growth stalls
These risks are well-known to the market — hence the depressed valuation multiple.
7. What Is the Management Doing to Address This?
- Appointed Rajinder Babbar as Chief Risk Officer (2023)
- Scaling secured retail lending — home, gold, and LAP loans
- Strengthening collections with tech-enabled field agents
- Targeting diversification to South and West India for next loan cycle
- Focused on improving underwriting through AI/ML-backed risk scoring
Management has articulated a 3-year transformation plan focused on derisking and return to growth.
8. What Are Analysts Saying?
| Brokerage | Rating | Target (₹) | Comments |
|---|---|---|---|
| Motilal Oswal | Buy | 230 | Valuation attractive, watch for asset quality |
| ICICI Securities | Hold | 190 | Cautious on East India disbursements |
| HDFC Securities | Add | 215 | Earnings bottomed out; growth to resume FY26 |
Consensus appears mixed, with valuation support in place but caution on operational execution.
9. Future Plans and Strategy
- Increase secured lending share to 50% of loan book by FY27
- Build a national distribution base with focus on tier 2/3 cities
- Digital-first onboarding through mobile apps and field tabs
- Strengthen liability franchise with higher CASA mix (currently ~37%)
- Launch co-lending partnerships with NBFCs
The pivot to a more balanced, retail-focused franchise is underway, though execution timelines remain uncertain.
A Deep-Value Opportunity or Persistent Risk?
At less than 1x book value, Bandhan Bank trades at a steep discount to peers despite superior NIM and improving profitability. However, asset quality and regional concentration continue to weigh on sentiment.
The reward could be significant if Bandhan delivers consistent earnings and manages to de-risk its loan book — but it demands patience and risk tolerance from investors.
Investor Takeaway: Bandhan Bank offers deep-value appeal, but the turnaround story needs clear signs of execution before the rerating begins.
Disclaimer: This article is for informational purposes only. Investors should conduct their own research or consult a financial advisor before making any investment decisions.
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