Brokerages Jefferies and Nomura have slashed their goal costs for the inventory of the Kolkata-based lender that emerged as a full-service financial institution after many years of operations as a microfinancier.
The inventory slid 6.21% to ₹185.1 on the NSE on Monday and has declined 24.17% up to now in 2024. Jefferies has revised the worth goal for the financial institution to ₹170 from ₹290 and downgraded the share to ‘underperform’ after this announcement.
Nomura additionally slashed the goal worth to ₹175 from ₹275.
“The unanticipated resignation… triggered the autumn within the inventory,” stated Shrikant Chouhan, head of fairness analysis at Kotak Securities. “This improvement is an sudden one and it has most likely come on the mistaken time, contemplating the financial institution is but to completely get well from the asset high quality points.”
CompaniesThe financial institution had reported 7% gross non-performing property in Q3FY24, which had raised issues about its asset high quality.”Bandhan Financial institution has seen a few top-level resignations prior to now yr, together with these of the CFO and CCO,” stated Yuvraj Choudhary, analysis analyst at Anand Rathi Institutional Equities. “The corporate is confronted with uncertainty in prime administration, together with greater stress in asset high quality and an audit in its CGMFU (Credit score Assure Fund for Micro Models) books.”Choudhary added that discovering a brand new chief govt by July, when Ghosh is about to retire and take a extra strategic function, will probably be a tough process, and stated buyers should stay cautious.
“Till the corporate finds a brand new MD, the shares will probably be beneath strain and face a large overhang,” he stated.
The voluntary retirement of Ghosh could convey an influence on the books of the financial institution, which was earlier arguing for a cyclical restoration within the core MFI (microfinance establishment) enterprise and low-cost valuations.
“Given the uncertainty, we’re reducing our development outlook and credit score value estimates for FY25-26, driving our EPS (earnings per share) down by about 10-14%,” stated brokerage Jefferies, in a be aware to its shoppers. The agency additionally stated that smoother/ quicker stability at prime administration/ enterprise will probably be key to their ranking stance.
Kotak Securities’ Chouhan nonetheless stays optimistic concerning the financial institution’s outlook in the long term. “The development within the asset high quality in current quarters, the tailwinds within the microfinance trade and a comparatively cheap valuation have been among the key components behind us having a optimistic view on the inventory,” stated Chouhan. “We have now a optimistic view concerning the financial institution, however the present improvement is almost certainly to de-rate the financial institution from its present ranges.”
