Equity Research Analyst - Long-Short

Raj S, CA, CFA

Artoval Advisors

Art’o’val stands for Art of Valuation. Artoval Advisors LLP is a professionally run advisory firm catering to various financial advisory services including Valuation, Investment Research, Training, Accounting, CFO Services and other ancillary services.

We are passionate about what we do and strongly believe in working with our clients as their extended teams. With Artoval Advisors as their trusted partner, our clients find it easy to achieve efficiency in service delivery without compromising on quality.

True Art of Valuation

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bandhan-bank-ltd" target="_blank" data-smartkarma-citation="entities:26705:1" rel="noopener">Bandhan Bank Ltd (BANDHAN IN)</a> has been an underperformer among Indian banks since the start of the COVID-19 pandemic due to asset quality issues in its core Group Microfinance portfolio.</li>
<li>Bandhan Bank’s leading position in the microfinance sector, strong operating margins, strategic de-risking, self-sustaining capital base, and cheap relative valuations make it a value bet with strong positive re-rating potential.
</li>
<li>
We value Bandhan Bank at 2.1x FY25e P/B in the base case, implying a 44% upside. On the other hand, we also discuss the risks to the thesis in detail.</li>
</ul>



Bandhan Bank Ltd (BANDHAN IN) has been an underperformer among Indian banks since the start of the COVID-19 pandemic due to asset quality issues in its core Group Microfinance portfolio.
Bandhan Bank’s leading position in the microfinance sector, strong operating margins, strategic de-risking, self-sustaining capital base, and cheap relative valuations make it a value bet with strong positive re-rating potential.


We value Bandhan Bank at 2.1x FY25e P/B in the base case, implying a 44% upside. On the other hand, we also discuss the risks to the thesis in detail.


Bandhan Bank: Initiating Coverage – Heads Up, Strong Re-Rating Ahead.

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

External broker reports(aggregated public sources)

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Bandhan Bank Bandhan Bank (BANDHAN) reported a healthy beat on PAT at INR10.6b (+47.5% YoY) fueled by controlled opex and provisions.</li><li>NII grew 20.7% YoY to INR30.1b (in line).</li><li>Margin was stable QoQ at 7.6%.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bandhan Bank Bandhan Bank (BANDHAN) reported a healthy beat on PAT at INR10.6b (+47.5% YoY) fueled by controlled opex and provisions.NII grew 20.7% YoY to INR30.1b (in line).Margin was stable QoQ at 7.6%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bandhan Bank - Business Gaining Normalcy; Lower Provisions Drive Earnings Beat

External broker reports(aggregated public sources), Axis Direct

Axis Direct

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Bandhan’s advances grew by 22% YoY and were flat QoQ (better performance in a seasonally weak quarter vs the historical trend of sharper QoQ de-growth in Q1).</li><li>Credit growth was led by the non-EEB segments (+23/3% YoY/QoQ), while EEB de-grew by 1% QoQ. Deposits grew by 23% YoY but de-grew by ~1.5% QoQ.</li><li>This was owing to a sharp decline in CASA Deposits (-11% QoQ). CASA Ratio stood at 33.4% vs 36/37.1% YoY/QoQ.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bandhan’s advances grew by 22% YoY and were flat QoQ (better performance in a seasonally weak quarter vs the historical trend of sharper QoQ de-growth in Q1).Credit growth was led by the non-EEB segments (+23/3% YoY/QoQ), while EEB de-grew by 1% QoQ. Deposits grew by 23% YoY but de-grew by ~1.5% QoQ.This was owing to a sharp decline in CASA Deposits (-11% QoQ). CASA Ratio stood at 33.4% vs 36/37.1% YoY/QoQ.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>With the review period nearly complete, <a href="https://www.smartkarma.com/entities/canara-bank" target="_blank" data-smartkarma-citation="entities:543:1" rel="noopener">Canara Bank (CBK IN)</a> should replace <a href="https://www.smartkarma.com/entities/bandhan-bank-ltd" target="_blank" data-smartkarma-citation="entities:26705:1" rel="noopener">Bandhan Bank Ltd (BANDHAN IN)</a> in the <a href="https://www.smartkarma.com/entities/nse-nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">NSE Nifty Bank Index (NSEBANK INDEX)</a> in September.</li>
<li>Passive trackers will need to buy over 2 days of ADV in <a href="https://www.smartkarma.com/entities/canara-bank" target="_blank" data-smartkarma-citation="entities:543:1" rel="noopener">Canara Bank (CBK IN)</a> while selling over 1 day of ADV in <a href="https://www.smartkarma.com/entities/bandhan-bank-ltd" target="_blank" data-smartkarma-citation="entities:26705:1" rel="noopener">Bandhan Bank Ltd (BANDHAN IN)</a>.</li>
<li>There is a strong possibility of <a href="https://www.smartkarma.com/entities/bandhan-bank-ltd" target="_blank" data-smartkarma-citation="entities:26705:1" rel="noopener">Bandhan Bank Ltd (BANDHAN IN)</a> being deleted from a global index in August and that could put the stock under even more pressure.</li>
</ul>


With the review period nearly complete, Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) in September.
Passive trackers will need to buy over 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
There is a strong possibility of Bandhan Bank Ltd (BANDHAN IN) being deleted from a global index in August and that could put the stock under even more pressure.


NIFTY Bank Index Rebalance Preview: Bandhan Bank Facing Double Deletion

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

<ul>
<li>While the street is getting excited about Bandhan Bank (assuming a change in management, end of a bad asset cycle, and lower valuations), we are not.</li>
<li>We believe the next set of problems for the bank are yet to be unleashed, and a change in management will only intensify the challenges ahead.</li>
<li>We believe the worst is yet to come for the bank. </li>
</ul>


While the street is getting excited about Bandhan Bank (assuming a change in management, end of a bad asset cycle, and lower valuations), we are not.
We believe the next set of problems for the bank are yet to be unleashed, and a change in management will only intensify the challenges ahead.
We believe the worst is yet to come for the bank. 


India Channel Insight | Bandhan Bank (BANDHAN IN) | The Other Shoe to Drop

India

Bandhan Bank Limited operates as a commercial bank. The Bank provides accounts checking, savings deposits, money market, mortgage, and term loans services, as well as card facilities and Internet banking services. Bandhan Bank serves customers in India.

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Bandhan Bank Ltd (BANDHAN IN)

Bandhan Bank: Initiating Coverage – Heads Up, Strong Re-Rating Ahead.

Bandhan Bank’s "turnaround story" with leading market position, strong operating margins, strategic de-risking, strong capital base, and cheap...

Raj S, CA, CFA

Bandhan Bank - Business Gaining Normalcy; Lower Provisions Drive Earnings Beat

Bandhan Bank Bandhan Bank (BANDHAN) reported a healthy beat on PAT at INR10.6b (+47.5% YoY) fueled by controlled opex and provisions.

Motilal Oswal

Bandhan Bank Ltd. - Good Quarter

Bandhan’s advances grew by 22% YoY and were flat QoQ (better performance in a seasonally weak quarter vs the historical trend of sharper QoQ de...

Axis Direct

NIFTY Bank Index Rebalance Preview: Bandhan Bank Facing Double Deletion

Canara Bank is a high probability add and Bandhan Bank is a high probability delete for the CNXBANK index. Bandhan could also be deleted from a...

Brian Freitas

India Channel Insight | Bandhan Bank (BANDHAN IN) | The Other Shoe to Drop

Despite the optimism surrounding Bandhan Bank's potential turnaround, we remain skeptical as we foresee more challenges ahead, especially with a...

Pranav Bhavsar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bandhan Bank: Initiating Coverage – Heads Up, Strong Re-Rating Ahead.

Bandhan Bank’s "turnaround story" with leading market position, strong operating margins, strategic de-risking, strong capital base, and cheap...

Raj S, CA, CFA

Bandhan Bank - Business Gaining Normalcy; Lower Provisions Drive Earnings Beat

Bandhan Bank Bandhan Bank (BANDHAN) reported a healthy beat on PAT at INR10.6b (+47.5% YoY) fueled by controlled opex and provisions.

Motilal Oswal

Bandhan Bank Ltd. - Good Quarter

Bandhan’s advances grew by 22% YoY and were flat QoQ (better performance in a seasonally weak quarter vs the historical trend of sharper QoQ de...

Axis Direct

NIFTY Bank Index Rebalance Preview: Bandhan Bank Facing Double Deletion

Canara Bank is a high probability add and Bandhan Bank is a high probability delete for the CNXBANK index. Bandhan could also be deleted from a...

Brian Freitas

India Channel Insight | Bandhan Bank (BANDHAN IN) | The Other Shoe to Drop

​Despite the optimism surrounding Bandhan Bank's potential turnaround, we remain skeptical as we foresee more challenges ahead, especially with a...

Pranav Bhavsar

Despite the optimism surrounding Bandhan Bank's potential turnaround, we remain skeptical as we foresee more challenges ahead, especially with a...