Bandhan Bank Ltd. is Rated Hold by MarketsMOJO

Current Rating and Its Significance

MarketsMOJO’s 'Hold' rating for Bandhan Bank Ltd. indicates a neutral stance on the stock, suggesting that investors should neither aggressively buy nor sell at this juncture. This rating reflects a balanced view of the bank’s strengths and challenges, signalling that while the stock has potential, certain risks and valuation concerns temper enthusiasm. The rating was revised from 'Sell' to 'Hold' on 04 February 2026, accompanied by a 10-point increase in the Mojo Score, now standing at 51.0. This shift recognises improvements in some areas, though caution remains warranted.

Quality Assessment: Strong Profitability Amidst Operational Challenges

As of 16 February 2026, Bandhan Bank demonstrates a solid quality profile, earning a 'good' grade in this category. The bank maintains a robust Net Interest Margin (NIM) of 7.66%, which is a key indicator of its ability to generate income from lending activities relative to interest expenses. Additionally, the Capital Adequacy Ratio (CAR) stands at a healthy 16.84%, well above regulatory minimums, signalling strong buffers against credit and operational risks. These factors underpin the bank’s resilience and capacity to absorb shocks.

However, the quality assessment is tempered by recent operational setbacks. The bank has reported negative results for two consecutive quarters, with the latest quarterly profit after tax (PAT) at ₹205.59 crores, reflecting a sharp 33.0% decline compared to the previous four-quarter average. Profit before tax excluding other income (PBT less OI) also fell by 10.7%, reaching a negative ₹400.63 crores. These figures highlight ongoing challenges in sustaining earnings momentum.

Valuation: Expensive but Reasonably Priced Relative to Peers

Bandhan Bank’s valuation is currently assessed as 'expensive'. The stock trades at a price-to-book (P/B) ratio of approximately 1.1, which is on the higher side for a bank with subdued profit growth. The return on assets (ROA) is modest at 0.5%, reflecting limited efficiency in asset utilisation. Despite this, the stock’s valuation is broadly in line with historical averages for its peer group, suggesting that the market has priced in both the bank’s strengths and its risks.

Investors should note that while the stock has delivered a 22.02% return over the past year as of 16 February 2026, this has come against a backdrop of a 59.4% decline in profits over the same period. This divergence between price appreciation and earnings performance warrants careful consideration when evaluating the stock’s future potential.

Financial Trend: Negative Growth and Liquidity Concerns

The financial trend for Bandhan Bank is currently negative, reflecting deteriorating profitability and growth metrics. Net profit has contracted at an annualised rate of -17.40%, signalling challenges in expanding the bottom line. Furthermore, cash and cash equivalents have declined to ₹5,330.47 crores as of the half-year mark, the lowest level recorded recently, raising questions about liquidity management.

These trends suggest that while the bank maintains strong capital buffers, its earnings trajectory and cash position require close monitoring. The negative results in recent quarters underscore the need for operational improvements to restore growth and profitability.

Technicals: Mildly Bullish Momentum

From a technical perspective, Bandhan Bank exhibits a mildly bullish trend. The stock has shown positive momentum over the short to medium term, with returns of +14.09% over the past month and +13.31% year-to-date as of 16 February 2026. The one-week gain of 1.94% and a modest 0.18% decline on the most recent trading day indicate some volatility but overall positive investor sentiment.

This technical strength may provide some support to the stock price, although it is important for investors to weigh this against the fundamental challenges the bank faces.

Additional Considerations: Promoter Confidence and Market Capitalisation

Bandhan Bank is classified as a small-cap stock within the private sector banking space. A notable concern is the reduction in promoter shareholding, which has decreased by 0.55% in the previous quarter to 39.74%. This decline in promoter confidence could be interpreted as a cautious stance on the bank’s near-term prospects and may influence investor sentiment.

Summary for Investors

In summary, Bandhan Bank Ltd.’s 'Hold' rating by MarketsMOJO reflects a nuanced view of the company’s current standing. The bank benefits from strong profitability metrics and capital adequacy, but these positives are offset by negative financial trends, expensive valuation, and recent earnings declines. The mildly bullish technical outlook offers some optimism, yet the reduction in promoter stake and liquidity concerns advise prudence.

For investors, this rating suggests maintaining existing positions rather than initiating new ones or exiting holdings aggressively. It is advisable to monitor upcoming quarterly results and any strategic initiatives the bank undertakes to address its challenges before making significant portfolio adjustments.

Bandhan Bank Ltd.: A Balanced Outlook Amid Mixed Signals

Bandhan Bank’s current position as of 16 February 2026 presents a complex picture. The bank’s high net interest margin and capital adequacy ratio are reassuring indicators of its core banking strength. Yet, the negative financial trend and recent quarterly losses highlight operational headwinds that cannot be ignored.

Valuation remains a sticking point, with the stock trading at a premium relative to its earnings growth prospects. The mildly bullish technical indicators suggest some investor confidence, but the reduction in promoter stake introduces an element of caution.

Investors should consider these factors collectively. The 'Hold' rating implies that the stock is fairly valued given current conditions, and that a wait-and-watch approach may be prudent until clearer signs of sustained recovery emerge. Monitoring upcoming earnings releases and management commentary will be critical to reassessing the stock’s outlook.

Looking Ahead

Going forward, Bandhan Bank’s ability to reverse its profit decline and improve cash reserves will be key drivers of investor sentiment. Strategic initiatives to enhance asset quality, control costs, and expand lending could help restore growth momentum. Meanwhile, the broader banking sector environment and macroeconomic factors will also influence the stock’s trajectory.

For now, the 'Hold' rating reflects a balanced assessment, signalling that while the stock is not an immediate buy, it remains a viable option for investors seeking exposure to the private sector banking segment with a moderate risk appetite.

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