Bandhan Bank shares tank 10% to lower circuit as FY27 RoA guidance cut spooks investors

Bandhan Bank shares tanked 10 per cent, hitting the lower circuit on the NSE at ₹187.95, after the lender cut its FY27-exit RoA guidance to 1.2-1.4 per cent from 1.6-1.8 per cent earlier, citing external factors including a volatile geopolitical environment, below-normal monsoon rainfall and tighter liquidity conditions that may lead to elevated cost of funds and higher technology expenses in the near term.

It reported around 35 per cent y-o-y growth in net profit to ₹501.67 crore for the first quarter of this fiscal, supported by a 40.5 per cent reduction in provisions during the period.

Management also indicated that external factors could weigh on costs in the near term.

JPMorgan said the guidance cut was the key focus of Bandhan Bank’s Q1 earnings call, with a significant cut in FY27 RoA and growth targets. It maintained a neutral rating with a target price of ₹175.

It said Bandhan Bank cut its Q4 RoA guidance by 40 basis points to 1.2-1.4 per cent, driven primarily by external factors. It attributed 30 basis points of the RoA impact to moderation in the NIM outlook from 6.5 per cent to the first-quarter level of 6.2 per cent due to tighter liquidity and elevated funding costs, while 10 basis points reflected elevated opex, especially rising technology-related costs.

Nomura maintained a neutral rating with a target price of ₹190. It said Q1 PAT of ₹500 crore, up 35 per cent y-o-y and down 6 per cent q-o-q, beat its estimate by 8 per cent, driven by strong NII, fee income and lower credit costs.

Nomura said the key development was management cutting FY27F RoA guidance, citing cost-of-funds pressure and rising technology opex tied to the external environment. It said 30 basis points of the 40 basis point cut reflected the NIM expansion management had earlier expected but no longer sees playing out, while 10 basis points reflected higher technology-related opex.

Macquarie recommended underperform with a target price of ₹130, citing an uncertain road to recovery, a PAT miss, a cut in the margin outlook and elevated credit costs.

Domestic brokerage Motilal Oswal downgraded the stock to neutral while retaining its target price of ₹225. It said management expects loan growth to remain at 14 per cent y-o-y, with EEB book growth expected to be between 5 per cent and 10 per cent. It noted that NIM was flat at 6.2 per cent and was guided to remain under pressure owing to higher deposit pricing.

The brokerage said management cut its RoA guidance to 1.2-1.4 per cent for the Q4FY27 exit, expecting adverse pressure on NIMs and opex owing to uncertain external factors and higher competitive intensity on deposits. It cut its FY27/FY28 earnings estimates by around 14 per cent and 6 per cent, respectively.

Meanwhile, CLSA retained an outperform rating with a target price of ₹235. It described the quarter as decent but said the management outlook was cautious.

Jefferies maintained a buy rating with a target price of ₹240. It said Q1 profit was ahead of estimates, supported by better loan growth, fees and MFI asset quality. It noted that management lowered FY27-exit RoA guidance to factor in higher funding costs due to tight liquidity and opex.