Recent Price Performance and Market Context
Bandhan Bank’s stock has been on a consistent decline, losing 5.09% over the past week and 8.06% in the last month, significantly underperforming the Sensex, which fell 1.77% and 3.56% respectively over the same periods. Year-to-date, the stock has dropped 5.32%, while the Sensex declined by 3.89%. Over the last year, the bank’s shares have fallen 8.28%, contrasting sharply with the Sensex’s 8.01% gain. The longer-term picture is even more stark, with Bandhan Bank’s stock down 41.78% over three years and 59.54% over five years, while the Sensex has risen 35.12% and 65.06% respectively.
Trading activity on 20 Jan showed rising investor participation, with delivery volumes increasing by 44.86% to 34.1 lakh shares compared to the five-day average. Despite this, the stock remains below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating sustained bearish momentum. Liquidity remains adequate, supporting trade sizes of up to ₹1.93 crore based on recent average traded values.
Perfect timing to enter! This Small Cap from IT - Software just turned profitable with growth momentum clearly building up. Get in before the broader market notices!
- - New profitability achieved
- - Growth momentum building
- - Under-the-radar entry
Fundamental Strengths Amidst Weakness
Despite the negative price action, Bandhan Bank maintains some fundamental strengths. The bank boasts a high net interest margin of 10.32%, reflecting efficient core lending operations. Its capital adequacy ratio stands robust at 17.42%, indicating strong buffers against credit and operational risks. Return on assets (ROA) is a modest 0.6%, and the stock trades at an attractive price-to-book value of 0.9, suggesting it is valued at a discount relative to peers’ historical averages.
However, these positives have not translated into share price gains, largely due to deteriorating profitability and operational challenges.
Profitability Concerns and Negative Earnings Impact
Bandhan Bank’s recent financial results have been disappointing. The company reported a sharp decline in profits, with profit before tax excluding other income (PBT less OI) plunging to a loss of ₹388.65 crore in the September quarter, a staggering 270.4% drop compared to the previous four-quarter average. Net profit after tax (PAT) also fell by 78.2% to ₹111.87 crore in the same period. These results reflect a significant erosion in earnings power, which has weighed heavily on investor sentiment.
The bank’s credit-deposit ratio, a key indicator of lending activity relative to deposits, stood at a low 85.15% for the half-year, signalling cautious credit growth or deposit accumulation challenges. Additionally, interest income declined by 2.16%, further pressuring profitability.
Promoter Stake Reduction and Market Confidence
Adding to concerns, promoters have reduced their stake by 0.63% over the previous quarter, now holding 40.29% of the company. Such a reduction in promoter shareholding often signals diminished confidence in the company’s near-term prospects, which can exacerbate negative market sentiment.
Bandhan Bank’s consistent underperformance relative to the benchmark indices over the past three years, including underperforming the BSE500 in each of the last three annual periods, further underscores the challenges facing the stock.
Considering Bandhan Bank? Wait! SwitchER has found potentially better options in Private Sector Bank and beyond. Compare this Smallcap with top-rated alternatives now!
- - Better options discovered
- - Private Sector Bank + beyond scope
- - Top-rated alternatives ready
Conclusion: Why Bandhan Bank Shares Are Falling
The decline in Bandhan Bank’s share price is primarily driven by deteriorating profitability, as evidenced by sharply lower quarterly profits and declining interest income. Despite strong capital adequacy and attractive valuation metrics, the market remains cautious due to the bank’s weak earnings performance and subdued credit growth. The reduction in promoter stake further undermines investor confidence, signalling potential concerns about the company’s future trajectory.
Moreover, the stock’s persistent underperformance against benchmark indices over multiple time frames highlights structural challenges that have yet to be resolved. The recent four-day consecutive fall and trading below all major moving averages reinforce the bearish technical outlook.
Investors should weigh these factors carefully, considering both the bank’s fundamental strengths and the significant headwinds it currently faces before making investment decisions.
Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →
