Bandhan Bank hits highest level since listing; up 56% against issue price

Bandhan Bank hit a new high of Rs 585, up 5% on Tuesday, trading at its highest level since listing on March 27, 2018

 

 

Share Market News » Shares of Bandhan Bank, which hit a new high of Rs 585, up 5% on Tuesday, was trading at its highest level since listing on March 27, 2018. The stock gained 54% over the issue price of Rs 375.

Since April 26, post FY18 results, Bandhan Bank has outperformed the market by surging 16% after the private sector lender reported 21% year on year (YoY) growth in net profit at Rs 13.46 billion. Net interest income grew 26% at Rs 30.32 billion over the previous fiscal.

Bandhan Bank is a unique business model of high yielding micro finance loan portfolio (94% priority sector fulfilment) and low cost deposit franchise with 34.3% CASA offered in the ambit of a commercial bank, according to analysts ICICI Securities.

“Net interest margin (NIM) was at 9.8% for FY18. With low cost funds, we expect NIM to sustain at around 9% even as the bank starts building non-micro loans. Along with higher NIM, low operating cost at around 35% C/I ratio remains its key differentiator, high RoA driver. Its opex to AUM ratio was at 4% for FY18. We expect high RoA of 3.5-4%, RoE >20% to sustain.

With almost double NIM, RoA vs. HDFC Bank & lower cost to income (C/I) ratio, with no legacy corporate portfolio pains, we believe Bandhan Bank will command higher premium to HDFC Bank,” the brokerage firm said in recent report. The brokerage firm had initiate coverage with a BUY recommendation with 12 month target price of Rs 600 per share.

Meanwhile, with Rs 695 billion Bandhan Bank has surpassed two insurance companies, General Insurance Corporation of India (Rs 666 billion) and SBI Life Insurance Company (Rs 665 billion) in overall market capitalisation ranking at 12:18 pm; the BSE data shows.

↓↓↓ Check Live NSE/BSE Stock Price ↓↓↓

Bandhan Bank Share Price

---

News Source : BS

Bandhan Bank’s Rs 44-bn IPO opens: Expert views on why you should subscribe

The private sector lender is expected to raise Rs 44.13 billion at the lower and Rs 44.73 billion at the upper end of the price band.

IPO News : The Bandhan Bank initial public offering (IPO) opened for subscription on Thursday, at a price band of Rs 370-375 a share. The issue will close on March 19.

The private sector lender is expected to raise Rs 44.13 billion at the lower and Rs 44.73 billion at the upper end of the price band. The bank has put on offer up to 119,280,494 equity shares, including a fresh issue of up to 97,663,910 equity shares.

The IPO also consists of an offer for sale of up to 14,050,780 equity shares by IFC and up to 7,565,804 equity shares by IFC FIG. Bids can be made for a minimum lot of 40 shares and in multiples of 40 shares thereafter.

Kotak Mahindra Capital Company, Axis Capital, Goldman Sachs (India) Securities, JM Financial and JP Morgan India are book running lead managers to the issue. Karvy Computershare is the registrar to the issue.

Should you subscribe to the Bandhan Bank IPO? Here’s what some brokerages recommend:

IIFL – Bandhan Bank was able to ride the recent MFI crisis smoothly unlike NBFC-MFIs. So in the current form, it is a robust and resilient micro loan financier with great growth prospects. The bank would likely be able to sustain RoA and RoE near the 4% and 25% mark respectively. We believe long term investors would find post-money valuation at 4.8x P/BV reasonably attractive. A comparable benchmark for valuation would be the recent IndusInd Bank-Bharat Fin transaction wherein the former valued the latter at ~5.2x FY18 P/BV.

Centrum Broking  – The bank will be able to attract adequate investor interest. Further, the bank is expected to benefit largely from financialisation of household investments especially in the rural & underbanked areas, vast branch network and presence in high growth segments of micro lending, retail and SME banking. Given the high valuations, investors can subscribe to the issue from a long term perspective. It must be noted that since the issue is being offered at expensive valuation, listing gains may be capped.

---

↓ More Expert Views on ↓

→ Bandhan Bank IPO , ICICI Securities IPO ←

Bandhan Bank IPO kicks off; Here’s All You Need To Know

At IPO price, the microfinance-focused bank is valued at nearly Rs 450 billion.

IPO News : Bandhan Bank is set to become the latest listed lender in India as it looks to raise Rs 4,473 crore via an initial public offering that opens on Thursday.

In the three-day offer, the company will issue up to 11.93 crore equity shares at a price band of Rs 370-375 apiece. At the upper end, it will command a valuation of Rs 44,730 crore, according to BloombergQuint’s calculations.

That makes it larger than not only non-banking finance company-turned banking entities such as AU Small Finance Bank, Ujjuvan Financial and Equitas Holdings, but also private banks such as RBL Bank, Federal Bank and IDFC Bank in terms of market capitalisation.

The IPO is a combination of fresh issue worth Rs 3,662 crore and an offer for sale of Rs 811 crore by existing investors – World Bank arms International Finance Corp (IFC) and IFC FIG Investment Company. Post the offer, the promoter holding in Bandhan Bank will come down to 82.3 percent from the current 89.6 percent.

An erstwhile microfinance company, Bandhan Financial Services Ltd., the country largest at the time, Bandhan Bank commenced banking operations in August 2015 after receiving a universal banking licence from the Reserve Bank of India.

Investment bankers are, however, confident that the issue will garner good response.

“Markets will always show some volatility. The bank’s fundamentals are very strong. It has a differentiated business model. Despite the market corrections, the issue will do well,” said Vishal Kampani, MD, JM Financial Group.

Bandhan Bank and IDFC Bank are among the latest entities to be awarded bank licenses by the RBI. The two received the central bank’s “in-principle” in April 2014 and a final nod a year later.

→ Bandhan Bank IPO ←