Bandhan Bank - West Bengal Election Outcome Uncertainty Addressed; Overhang Subsides: ICICI Securities
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ICICI Securities Report
Bandhan Bank Ltd. has underperformed Bank Nifty by 20-25% over past three months/six months/ 12 months.
State-specific events in its dominating geographies of West Bengal and Assam led to deviation from its track record of better resilience than peers.
There was disappointment in collection efficiency (sub-90% in January 2021), credit cost (more than 5.5% annualised run-rate in Q3 FY21) and proforma gross non-performing assets (spiked to 7.12%).
Besides Q3 FY21 performance, uncertainty around election outcome in its dominating state has also weighed on stock performance.
However, All-India Trinamool Congress has won the West Bengal state election, thereby suggesting status quo in state administration.
This will subside the major overhang of election outcome on stock performance.
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