Bandhan Bank share price slips over 14% on weak margin outlook. Should you buy, sell or hold the stock after Q1 results?

Bandhan Bank share price declined over 14% in early trade on Wednesday after the lender announced its Q1 results. Bandhan Bank shares slipped as much as 14.3% to ₹178.75 apiece on the BSE.

Private lender Bandhan Bank reported a 34.8% year-on-year (YoY) increase in net profit to ₹501.6 crore for the first quarter of FY27, amid lower provisions.

The bank’s Net Interest Income (NII) in Q1FY27 grew 6% YoY to ₹2,921 crore, while its net interest margin (NIM) stood at 6.2%, remaining flat sequentially.

Asset quality of the bank improved sequentially, with the gross NPA ratio falling to 3.15% in the June quarter from 3.27% in the previous quarter. Net NPA ratio also declined to 0.93% from 0.97% quarter-on-quarter.

Provisions dropped to ₹682.5 crore in Q1FY27, compared with ₹677 crore in the previous quarter and ₹1,147 crore in the year-ago period.

Loan growth was strong at 18% YoY supported by the non-MFI portfolio, whereas deposit growth remained subdued at 7% YoY, leading to CD ratio inching up to 92%.

The key negative in Bandhan Bank Q1 results was its management lowering FY27 exit return-on-assets (RoA) guidance to 1.2% – 1 .4% from 1.6% – 1.8% earlier, expecting adverse pressure on NIMs and opex owing to uncertain external factors and higher competitive intensity on deposits.

It maintained its credit cost guidance of 1.6% – 1.8% and growth guidance of 14% for FY27, analysts said.

Should you buy, sell or hold Bandhan Bank shares after Q1 results?

Bandhan reported a steady quarter, led by a gradual improvement in credit costs to 1.8%. Business momentum was relatively soft, with growth largely led by the non-EEB portfolio.

Brokerage firm Motilal Oswal Financial Services cut its FY27 and FY28 earnings estimates for Bandhan Bank by ~14% and 6% and expects the lender to deliver an RoA of 1.0% and 1.4% in FY27 and FY28.

It downgraded its rating on Bandhan Bank shares to ‘Neutral’ while retaining its target price of ₹225 apiece.

JM Financial believes Bandhan Bank’s earnings recovery is likely to be slower than earlier anticipated as margin expansion and operating leverage benefits get pushed out. Hence, it reduced EPS estimates by 2–3% for FY27 and FY28 and retained an ‘Add’ rating on the stock.

The brokerage firm raised Bandhan Bank share price target to ₹220 from ₹200 earlier, led by rollover of multiple, valuing the stock at 1.2x FY28E P/B as against 1.1x of FY28E P/B earlier.

Nuvama Institutional Equities believes Bandhan Bank’s MFI recovery and normalising credit cost story remains on track. However, higher funding costs amid West-Asia conflict and ongoing portfolio shift towards secured retail and corporate lending are likely to weigh on margins despite improving long-term risk-adjusted returns.

Factoring in Q1 earnings miss and weaker opex and margin guidance, the brokerage firm cut FY27–29E earnings estimates by 11–14% and expects the bank’s RoA trajectory to be gradual at 1.2%, 1.4% and 1.6% over FY27, FY28E and FY29.

Hence, it downgraded its rating on Bandhan Bank shares to ‘Hold’ from ‘Buy’, and cut the target price to ₹230 apiece from ₹250 earlier.

At 10:00 AM, Bandhan Bank share price was trading 13.97% lower at ₹179.45 apiece on the BSE.

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