CLSA's Twin Bets: Bullish On Bandhan Bank And Prestige Estates, Sees Valuation Gaps As Unwarranted
Despite short-term hiccups, both names have solid fundamentals, scale, and momentum, believes CLSA.
CLSA is holding its ground on two very different small and midcap stories — Bandhan Bank and Prestige Estates Projects — but with the same verdict: 'outperform'. Despite short-term hiccups, both names have solid fundamentals, scale, and momentum that CLSA believes the market currently isn't giving enough credit for in its latest note.
On Bandhan Bank
Bandhan Bank's March quarter was a bit of a mixed bag. While core operating performance held steady and matched expectations, slippages came in 8% higher than expected, dragging down profit after tax by a steep 25%. The main culprit, noted CLSA, was microfinance slippages, which inched up from Rs 12,000 crore to Rs 13,500 crore. Non-MFI loans stayed stable.
Loan growth cooled off to 9%, from 15% last quarter, and net interest margin narrowed by 20 basis points to 6.7%. But a noticeable upside is that early stress indicators are improving, and the 0–90 days helpless MFI book improved by 50 basis points to 3.3%. April's collections were decent, said the brokerage, and while management expects higher credit costs in the first half of fiscal 2026, the second half could see things stabilise.
Bandhan also slashed savings deposit rates by up to 300 basis points and is sitting on excess liquidity, which could be a drag on NIMs for now but a potential tailwind later, as per CLSA. The firm has trimmed profit estimates for the fiscal year by 6%, but next fiscal's forecasts remain intact.
On Prestige Estates
Prestige Estates Projects is scripting a very different success story. The biggest housing developer in South India and among the largest nationwide, the company is riding high on presales momentum, aggressive launches, and a foray into rental assets, says CLSA.
It's already among the top two developers in terms of presales, but the kicker is that it trades at a big discount to peers like Macrotech and Oberoi Realty.
With a Rs 42,000 crore launch pipeline and Rs 20,000 crore in unsold inventory, the firm looks set to not only meet but maybe even beat that guidance. It notched up Rs 7,000 crore in presales in the March quarter alone.
Prestige is already among the top three in Mumbai and is poised to break into the top five in NCR. CLSA believes the company will end fiscal 2026 with the second-highest presales in the country, just behind Godrej Properties.
Despite having larger operations than many peers, Prestige trades at just 3x its fiscal 2026 EV/cash EBITDA, compared to the 9–22x range peers command. 'That's a major valuation gap,' says CLSA, staying bullish with its 'outperform' rating.
