Shares of Bandhan Bank will remain in focus during Wednesday's session as Kotak Securities has reaffirmed its 'Buy' rating on the stock, maintaining a target price of Rs 235 per share. The reiteration follows a recent meeting hosted by the brokerage firm with the bank's top management, which highlighted the lender's strategic pivot amid current macroeconomic headwinds.
According to the latest note from Kotak Securities, the bank's leadership is adopting a decidedly cautious stance in the near term. A primary element of this strategy is a deliberate move to limit growth in its microfinance (MFI) portfolio. The management cited prevailing macroeconomic uncertainties as the core reason for hitting the brakes on MFI expansion, prioritizing asset quality over aggressive loan book growth.
While top-line growth in the microfinance segment may remain muted, Kotak Securities noted that improving credit costs are expected to be the primary engine driving the bank's Return on Assets (RoA) improvement. A reduction in provisions and credit costs is anticipated to provide a substantial tailwind to the lender's profitability metrics in the coming quarters.
Despite the near-term caution, Bandhan Bank's management remains committed to structural growth. The brokerage highlighted that the bank will continue to channel investments into building a sustainable, diversified franchise.
"The leadership team is building for the long term, but hoping for a respectable Return on Equity (RoE) profile," the brokerage indicated, underscoring the management's focus on balancing immediate profitability with long-term institutional resilience.
Shares of Bandhan Bank have been closely watched by investors as the lender navigates the dual tasks of managing its historical MFI exposure and diversifying its retail and commercial banking book. For now, Kotak Securities believes the current valuation adequately prices in the near-term hurdles, keeping its target price firmly at Rs 235.
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