Bandhan Bank Ltd emerged as the biggest loser in the BSE's 'A' group, tumbling 15.4% to ₹176.73 on Wednesday, July 22, 2026, after the bank's post-earnings guidance cut blindsided investors. According to latest reports, the stock fell despite the bank reporting a 35% year-on-year rise in June-quarter net profit to ₹501.67 crore, as investors focused on a weaker profitability outlook. The sharp decline came after the lender cut its FY27 return-on-assets (RoA) guidance to 1.2-1.4% from 1.6-1.8%, citing elevated deposit costs, higher technology investments, seasonal factors including the monsoon, and an uncertain macroeconomic environment.
The guidance revision triggered swift analyst action, with at least one domestic brokerage downgrading the stock to Hold from Buy on the day, and Motilal Oswal moving to a Neutral rating reacting to the diminished profitability trajectory. Deven Choksey had already downgraded to Hold two days earlier, ahead of the results. Adding to the uncertainty, the bank's Chief Financial Officer is set to step down in late September 2026, introducing a layer of management transition risk at a sensitive juncture. Trading volumes were exceptionally heavy, underscoring the breadth of institutional selling, with the broader Indian equity market offering little cushion as the BSE Sensex declined modestly on the day.
Despite the market sell-off, Bandhan Bank delivered strong Q1 results with net interest income increasing 5.9% year-on-year to ₹2,920.5 crore and gross advances rising 16.4% to ₹1,55,555 crore. As reported by Kotak Neo Research, the bank's asset quality improved significantly with gross non-performing assets declining to 3.1% from 5% a year ago, while provisions and contingencies fell 40.5% year-on-year to ₹682.58 crore. However, the bank's medium-term profitability targets remain intact but will take longer to achieve due to external headwinds, according to Managing Director and CEO Partha Pratim Sengupta. Net interest margin stood at 6.2% in Q1 FY27, down 16 basis points year-on-year, as the bank faces competition for deposits and funding growth challenges.
The bank's cost-to-income ratio increased significantly from 52.1% in Q1 FY26 to 61.5% in Q1 FY27, meaning the bank spent more than ₹61 to generate every ₹100 of income compared with around ₹52 a year earlier. Operating expenses rose 19.4% to ₹2,166.3 crore, with the ratio already at 4.3% of assets in Q1 FY27 against the guided 4.2%. Management attributed around 30 basis points of the 40-basis-point RoA reset to pressure on net interest margin, with the remaining 10 basis points coming from higher operating expenses. The bank's gross advances grew 16.4% while total deposits increased only 6.6%, with deposits declining 0.9% sequentially, creating funding pressure. Elevated technology spending and annual wage revisions kept operating costs well above expectations, causing pre-provisioning operating profit to fall nearly 19% year-on-year.
Wednesday's sell-off erased part of the stock's recent gains, with Bandhan Bank shares declining around 16% over the past month and more than 17% in the last five trading sessions. Despite the sharp decline, Kotak Neo Research retained its BUY rating on Bandhan Bank with a fair value of ₹235, noting that the bank's earnings growth was largely driven by lower credit costs. However, the research firm lowered its own RoA estimates following management's revised guidance and highlighted that slower margin expansion and higher operating expenses could delay a near-term re-rating of the stock. The stock has fallen over 41% in the last five years and around 18% over the past three years according to NSE data.
