Bandhan Bank shares extended their losses for the second straight session on Thursday, taking the two-day decline to around 20 percent, after the lender's cut in FY27 guidance weighed on investor sentiment. The stock had settled 17 percent lower in the previous session and declined more than 3 percent during Thursday's trade, building on Wednesday's sharp decline. According to latest reports, the stock opened sharply lower with a gap down of 10% and remained at depressed levels throughout the session, showing no recovery and no bounce back. The intraday volatility was notably high at 184.13%, calculated from the weighted average price, underscoring the stock's turbulent trading environment. Bandhan Bank's price action underperformed its sector peers, lagging the Private Sector Bank industry by approximately 9.95%. The sharp fall was driven largely by the management's downgrade in profitability guidance for FY27 following the June quarter earnings, rather than the quarterly performance itself.
Global brokerage JPMorgan maintained a 'Neutral' rating on the stock with a target price of ₹175, while Nomura maintained a 'Neutral' rating with a target price of ₹190. According to JPMorgan, "Guidance cut was the key focus in Bandhan's 1QFY27 earnings call, with a significant reduction in FY27 RoA and growth targets." The brokerage noted that the bank lowered its 4QFY27 return on assets (RoA) guidance by 40 basis points to 1.2-1.4 percent from 1.6-1.8 percent earlier. JPMorgan attributed the revision to a 30 basis point impact from a weaker net interest margin (NIM) outlook, with guidance lowered from 6.5 percent to the first-quarter level of 6.2 percent due to tighter liquidity and elevated funding costs. It also cited a 10 basis point impact from higher operating expenses, particularly technology-related costs, with the opex ratio rising to 4.3 percent from the earlier guidance of 4.2 percent.
The technology cost that Bandhan Bank has been incurring is mainly on account of the loan origination system that the bank is installing to unveil new products and cross-sell products, as reported by The Economic Times. This higher-than-anticipated tech cost led to a rise in operating expenses to asset ratio to 4.3% against the guidance of 4.2%. Chief Financial Officer Rajeev Mantri indicated that after two years of investments on technology, which is beyond FY2028, the bank would start to see improvement in operating efficiencies. Sengupta noted that while the elevated funding costs and higher technology-related expenses have already started impacting profitability, the leveraging of these costs will definitely come in the future.
Bandhan Bank cut its FY27 loan growth guidance to the lower end of the previously guided 14-15 percent range, citing a conscious slowdown in growth amid rising asset quality risks due to higher energy costs, supply chain disruptions and uncertain monsoon conditions. According to Nomura, the management's decision to cut FY27 return on assets guidance to 1.2-1.4 percent from 1.6-1.8 percent remained the key takeaway from the quarterly results. The brokerage noted that Bandhan Bank's first-quarter earnings were 8 percent above its estimates, supported by strong net interest income, fee income and lower credit costs. Despite the strong quarterly performance, the guidance revision overshadowed the positive results and weighed heavily on investor sentiment.
The stock experienced significant intraday volatility, touching an intraday low of ₹177.5 apiece, marking a 15% drop from the previous close. As per Macquarie Capital's Suresh Ganapathy, "Constrained margins and delayed operating leverage leave the near-term earnings outlook cautious (for Bandhan Bank). RoA remains subpar, and the path towards RoA improvement remains clouded." The deviation from guidance is due to external uncertainties leading to higher funding costs and higher-technology related expenses, which have already started impacting profitability. CLSA acknowledged that the revised guidance could unsettle investors but noted that its own estimates had already factored in a lower profitability outlook, while the bank remains focused on customer-centric and digitally enabled growth by strengthening its distribution network and expanding product offerings.
From a technical standpoint, Bandhan Bank's current price remains above its 200-day moving average, which often serves as a long-term support level, though it is trading below its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short-to-medium-term weakness. The stock currently holds a Mojo Score of 72.0, reflecting a positive overall assessment, with the Mojo Grade upgraded from Hold to Buy on April 2, 2026. Despite today's price pressure, the Mojo Grade and score indicate a favourable medium-term outlook relative to peers, though the immediate trading environment remains challenging. The sharp decline and persistent weakness can be attributed to a combination of factors including the stock's gap down opening, sustained selling interest, and the broader market's negative sentiment.
