Bandhan Bank trades near 3-month low; slips 21% thus far in December

Shares of Bandhan Bank continued to reel under pressure, falling for the fourth consecutive day, on the BSE on Wednesday. The stock declined 5 per cent at Rs 457 in the intra-day trade today.

The stock of the private sector lender was down 21 per cent thus far in the month of December. In comparison, the S&P BSE Sensex was up 1.5 per cent. It was trading at its lowest level since September 20, 2019.

With today’s fall, the stock has fallen 30 per cent from its all-time high level of Rs 650 touched on October 29. Prior to that, between July 24 and October 15, it had rallied 42 per cent, as against a 1.7 per cent rise in the benchmark index.

Geographically, Bandhan Bank is highly concentrated in the eastern and north-eastern regions of India, specifically West Bengal and Assam, which accounts for a major share of its advances. According to rating agency ICRA, the bank is exposed to event risks and economic conditions in these geographies as 62 per cent of its branches are located in the region.

"Even as the bank expands its operations to 34 states and Union Territories (UTs), the geographical diversification will take time because of the large vintage existing customer base in the eastern and north-eastern regions of India," ICRA said while assigning credit ratings to the bank’s instruments with ‘stable’ outlook.

“The ratings remains constrained by the marginal borrower profile of microfinance borrowers and is also vulnerable to political appeasement, which might result in asset quality risks,” it added.

"Apart from technical supply pressures on the stock from mandatory requirement of promoter stake sale from 61 per cent to 40 per cent required immediately, we also have fundamental concerns on over-leverage in core markets of eastern India; inability to meaningfully diversify away from microfinance and concentration risk", analysts at Macquarie Research said in October note.

At 11:55 am, Bandhan Bank partially erased its early morning loss and was trading 1.5 per cent lower at Rs 473 on the BSE. The S&P BSE Sensex was up 0.18 per cent at 41,428-mark. The counter has seen huge trading volumes with a combined 4.8 million equity shares changing hands on the NSE and BSE so far.

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