Bandhan Bank Share Price Falls Nearly 17% After Q1 Results: Here's What Investors Should Know

[00:00:00]Um, you know, we've seen that, you know, Alex and I were discussing earlier as just when we started the show that the numbers were not too bad, but unfortunately the guidance cut in terms of ROI is something that is, uh, you know, spooked the street and that's why we're seeing a down tick of almost what, 16% in trade for this one, right?

[00:00:17]>> to see, okay, I thought that the net interest income growth was not very, uh, significant. It was in single digits and I think it it, uh, showcases that the bank is being very cautious in the lending that it is doing. It is focusing more on the secured book, so its secured book has grown about 27%.

[00:00:37]It has gone up to 57% of the overall book. Uh, and obviously in the secured space you're not going to earn as much per loan as you would in the unsecured space.

[00:00:48]>> Right.

[00:00:48]>> So, therefore that's going to be putting pressure on the yields that you get and the cost of borrowing is actually all the cost of funds has gone up. So, both those pressure leading to problems on the NIM. The outlook for the NIMs is also not not very good, right? So, from that perspective, I think the street is viewing that the gains that they've had in pull up the year-to-date chart for Bandhan Bank. You will notice that it saw quite a bit of a gain when it turned the corner on asset quality. And then after that there's a lot of money that got taken off the table because the suggestion was that what appeared to be a turn in the corner has led to a situation where you're not going to see that rising trajectory through the year.

[00:01:31]Is that the way to look at Bandhan Bank, Nirav, in your opinion? That what was promised to be a great financial year on multiple metrics has turned out to be not so great. In that it's not terrible, they're moving in the right direction, they're just not going as fast as people thought they would.

[00:01:50]>> Uh, well, sometimes it's better to be cautious and start off on a on us safe note. And I think that's what the management is targeting at this point of time. But the market obviously has got expectations in terms of a strong advances growth at the same time a low cost of funds which naturally tends to aid the net interest income and markets are generally targeting NIMs in excess of 3 and 1/2 3.7%.

[00:02:23]That's what we've seen in the case of majority of the banks. And if there is any slippage over there, then I think markets tend to punish the stock badly.

[00:02:34]So I think no harm in being conservative at this point of time, but hopefully things should pick up and this this can be viewed as an opportunity if the management is able to get its act right in the future.

[00:02:48]>> Okay. And Nilesh, what about the charts?

[00:02:49]Because the expectation was that from I mean, if you take a look at a slightly longer term time frame, the charts were looking very attractive since it's you know, it break out in I think around April 29th or so. But this is a one-off event of course where we've seen a significant outtake. Do you think that this could be a time when you can take a look at the counter, maybe enter at lower levels?

[00:03:13]Chartically from a slightly medium-term perspective, what would you suggest?

[00:03:17]>> Well, Mayur, today we have seen a breakdown on derivative front.

[00:03:21]Interesting development we have seen a huge amount of build up on the short side where 20% lower has been added. And technically, yes, there was a breakout in the month of April, a major breakout.

[00:03:30]But now after today's fall with a big gap down opening, the counter has broken below all short-term moving averages.

[00:03:37]The only support I can see on the chart is at 171. That's the long-term 200-day moving average. And just in case if it slips below the same decisively, then target on the lower side will open up for 160 to 155 as well. But as of now, looks like comparatively a little better close today Uh above 171 then there could be possibility of a pullback move towards 180 to 185. Not expecting any V-shaped recovery, but yes, some bit of a pullback move after today's sharp fall.

[00:04:04]That cannot be ruled out.