Bandhan Bank enters league of top-50 most valuable company

Bandhan Bank, the private sector lender, has entered the list of the top-50 most valuable companies in terms of market capitalization (m-cap) following a sharp surge in its stock price post listing.

Bandhan Bank, with an m-cap of Rs 640 billion, stood at 50th position in overall m-cap ranking on the BSE at 10:37 am, the exchange data shows. The bank climbed 5 positions in the m-cap pecking order since its debut on the bourses on March 27, 2018.

Bandhan Bank has surpassed fast moving consumer goods companies Dabur India and Britannia Industries, New India Assurance Company, Tech Mahindra and Bharti Infrastructure in past 10 trading sessions.  Bandhan Bank, the country’s eighth-most valuable lender, is now stood behind YES Bank, which have market-cap of Rs 717 billion.

Shares of Bandhan Bank hit a new high of Rs 540, up 1.5% on Thursday, rallied 13% since its debut. The stock gained 44% over the issue price of Rs 375. On comparison, the S&P BSE Sensex was up 2.6% during the same period.

Bandhan Bank has a very healthy business mix – on the asset side 96.5% of total advances qualifying as priority sector lending (PSL) and on the liability side 33.2% of total deposits in the low-cost current account & savings account (CASA).

“At the end of first nine months of financial 2017-18 (9MFY18), the net interest margin (NIM) stood at a healthy level of 9.9% with high return ratios at 25.6% RoE and 4.1% RoA. Despite stress across the banking and NBFC industries, the asset quality of Bandhan was healthy at 1.67% gross NPA and 0.8% net NPA as of 31 Dec’17,” Centrum Broking had said in an IPO note.

Although the company has healthy fundamentals for FY17 and 9MFY18, they do not have a significant past record. As a result, it would be difficult to evaluate the bank’s business and its future trends. Further, the bank may not be able to maintain such robust fundamentals in future considering base effect, change in business strategy and expansions. Further, if Bandhan is not able to manage the banking operations efficiently in future, it may affect their profitability and asset quality, the brokerage firm said in a note.