ICICI Securities has revised its rating on Bandhan Bank to Hold from Buy and reduced the target price to ₹200 from ₹230 in its research report dated July 22, 2026. According to the brokerage's analysis, the revision reflects concerns about weak operating earnings and slower-than-system loan growth, with the target multiple reduced to approximately 1.1x from 1.3x earlier. The rating change comes after the bank's latest quarterly results showed mixed performance with strong profit growth but revised guidance concerns.
Bandhan Bank reported a strong Q1FY27 PAT of ₹502 crore, representing a 35% year-on-year growth, though shares fell 1.19% as management cut ROA guidance. The performance was led by stable Net Interest Margin (NIM) at 6.2% and improved asset quality, with gross NPA at 3.1% and net NPA at 0.9%. The bank maintained its credit growth at 14% year-on-year and credit cost guidance remains intact, with improved fee income and benign credit costs expected to drive RoA towards the guided range. Non-EEB advances grew 27% YoY, now comprising two-thirds of the loan book as the bank diversifies away from microfinance reliance.
The bank has cut its Q4FY27 RoA guidance from 1.6-1.8% to 1.2-1.4% due to pressure on NIM and operating expenses, with management citing higher funding costs and technology spending as key margin pressures ahead. The bank now expects a stable NIM trajectory (versus earlier expectations of an uptick) and slight pressure on costs due to continued franchise investments. While acknowledging uncertainty in the external environment, ICICI Securities notes that the RoA guidance cut comes amidst improving broader stress and growth trends in the MFI segment, with the timing warranting attention. The bank plans to launch credit cards this quarter and increase branch-based sourcing to reduce dependence on direct selling agents.
ICICI Securities has identified upside risk factors including better-than-expected NIM performance and downside risk factors including higher-than-expected stress formation. The brokerage's revised target price of ₹200 reflects these risk considerations, with the rating change reflecting concerns about weak operating earnings and slower-than-system loan growth despite the bank's improving operational metrics. The stock currently trades at ₹173.05 with a market cap of ₹280.12 billion and dividend yield of 0.71%. Analysts maintain an overall Buy rating with 15.48% upside potential, though the average target price of ₹199.96 suggests limited upside to ICICI Securities' ₹200 target.
