1.The capital adequacy is ~24%, one of the best in the industry.
The stock couldn’t rebound in today’s strong move.
I believe they’re not having exposure to high now risk sectors like telecom/ real estate/ jewellery/ aviation. Their lending is to the micro borrowers with a successful track record + home buyers thru Gruh.
All the lenders whether banks or nbfcs are bound to face tough quarters.
Can’t the stock which from 450 to 155 rebound if the market sentiment ever improves?
Would Bandhan suffer more than HDFC/ Kotak/ ICICI despite robust crar?
All microfinance companies are going down eg credit access Gramin has gone down by around 60% .The market is fearing huge NPA in this sector. The actual situation can only be clarified by someone knowing this sector very closely
Bandhan bank has opened accounts for those who have availed credit from it so that whatever surplus they HV ,they can deposit.In the current situation, leave aside the surplus, their earnings would become zero for at least 2-3 months and they would not be able to pay daily installments.
Until RBI comes with some regulatory forbearance this uncertainty is likely to continue,even after some leeway is granted to the borrowers they may still default leading to spike in credit costs given that most of the lending is unsecured.
Some other existing issues that were already plaguing the stock were Assam issue and promoter stake sale overhang.
If Corona spread is contained then the present price may well capture most of the risks and we could see good returns going ahead but if number of cases spike and the virus spreads in India then it may be too early to take that call.
My thoughts: received Bandhan from Gruh and never sold anything. Now it pains me to see the value erode at least on paper. Ironically, the CMP is less than Gruh’s lowest value when Bandhan announced take over of Gruh if I remember correct. There are two options: 1) take the loss and invest in some other opportunity. 2) wait and hope for rebound when the market turns around and there is clarity in the sector. In my case, I prefer to wait as simply I can’t make up mind on where to invest as I don’t want to sit in cash with exit from Bandhan. I “hope” in 2-3 years time, it will be fine.
Exited over last few days after long wait and averaging( got from Gruh conversion), converted to other opportunity. Like biz and promoter but couldn’t see capital being eroded.
When we cant understand reasons behind continuous fall, mkt usually knows more than we do. On top of it is a fin institute and where biggies are being brutally punished- little chances for BB to stand tall - seeing no effort to reverse trend in today’s banks move is not a good sign.
Plz watch the latest interview with CNBC where Mr. Ghosh clarified the following:
In March, deposits have gone up compared to Feb. Actual numbers will be revealed in the results.
Assam situation stable with 93.4% collection and 98% overall.
No real impact on deposit if Maharashtra govt. moves money, usually this is a routine year-end exercise. 76% deposits are retail.
Q3 lower nims and higher NPA due to gruh merger.
Not intending to sell yes bank stake.
Is the current price offering value to start nibbling? I heard that unless the goodwill is totally written off, dividend can’t be declared which will kill the p/l. Plz confirm
Markets have moved fast, reason no-one is picking Bandhan today is - who will pay unsecured loans during a lockdown? Some segments they serve would be most impacted.
I would expect similar 80-90% collection curve for overall during Apr-Jun qtr results.
If those curves do show up, who will pay fancy 4-5 P/B?
All financials have halved but those with specific issues - Smaller corporate banks (Indusind and others) , microfinance have been hammered out
Government is coming out with package to support people at the bottom of the pyramid (who are maximum affected with the lockdown). This is the customer base of Bandhan. Hence I feel negative news is over played over here and will see stock price recovery from today onwards.
The GOI has announced support to shgs and other lower strata thru Jan dhan, pds and other ways.
Bandhan I feel shud continue to see monthly instalments being repaid without much interruptions given the shg lending model and lending mostly to women.
This is an old challenge that mfis hv been facing since time immemorial from political parties. Bandhan has managed to grow despite these challenges…until now.
Let us allow the management to handle operational challenges and keep a close eye.
The GOI needs MFI and NBFCs to survive and thrive for last mile finding.
I have worked for 8 years in agriculture and rural banking. The current situation is unique and NPA will happen on case to case basis. The moratorium of 3 months will help but its not " One Pill to cure all diseases". But one thing i am sure of is that Doomsday is not coming as some Pundits are saying. I think CMP of Bandhan is very attractive.
Bandhan doesn’t have issues in liability side ie Deposit base is strong and granular
Capital Adequacy Ratio is at 24.69% (vs 15% for RBL/Indusind)
Rural India might show higher resilience,
Having said that MSME + Unsecured lending risk stays.
Markets might wait for clarity to emerge to give it a multiple it deserves. For now in a lockdown its a black-box and markets don’t like uncertainty.
