Bandhan Bank’s Q1 FY26 financial results have arrived, and they deliver a mix of optimism and caution. While there’s a visible improvement in quarterly profit, the lingering stress in loan quality and shrinking margins raises questions about sustainability.
Let’s break it all down and see what it means for investors 👇
📌 Quick Snapshot: Bandhan Bank Q1 FY26 Performance
| Metric | Q1 FY26 | QoQ (Q4 FY25) | YoY (Q1 FY25) |
|---|---|---|---|
| Net Profit (PAT) | ₹370 Cr | ▲ 17% | ▼ -65% |
| Net Interest Income | ₹2,760 Cr | Flat (0%) | ▼ -7.7% |
| Operating Profit | ₹1,670 Cr | ▲ 6.2% | ▼ -14.1% |
| GNPA Ratio | 5.0% | ▲ 26 bps | ▲ 74 bps |
| CASA Ratio | 27.1% | ▼ 430 bps QoQ | ▼ 630 bps YoY |
| Return on Equity | 5.9% | ▲ 70 bps | ▼ -1283 bps |
🔍 Positive Highlights from the Quarter
✅ Profit Regains Momentum
Sequential growth in profit (17% QoQ) shows signs of operational normalization, even after a tough Q4.
✅ Strong Digital Banking Adoption
The bank recorded:
- 98% of all retail transactions via digital platforms
- 92% of savings accounts opened through digital channels
- 91% growth in digital deposits
- 54% rise in overall digital transaction volume
This positions Bandhan among the tech-forward private banks in India.
✅ Strategic Shift Toward Secured Lending
The share of secured loans now stands at 52.1%, reducing exposure to high-risk unsecured loans. A welcome change for risk-averse investors.
✅ Healthy Capital Buffer
Capital adequacy remains solid at 19.4%, offering stability during macro and credit stress periods.
⚠️ Concerns That Need Attention
❌ Yearly Profit Decline Remains Sharp
While the quarter-on-quarter improvement is encouraging, the 65% drop in YoY profit highlights continued pressure from high provisioning and declining margins.
❌ Asset Quality Still a Worry
GNPA climbed to 5.0%, while NNPA rose to 1.4% — both worsening compared to last year. Credit cost, although slightly improved QoQ, remains elevated at 3.5%.
❌ CASA Ratio Weakens
CASA has fallen significantly YoY to 27.1%, indicating increased reliance on costlier term deposits — a margin headwind.
❌ Microfinance (EEB) Stress Continues
Once Bandhan’s core strength, the Emerging Entrepreneurs Business (EEB) is still shrinking in share and plagued by higher NPAs.
🧩 Segment-Wise Performance
| Segment | Revenue (₹ Cr) | QoQ Trend | Commentary |
|---|---|---|---|
| Retail Banking | ₹5,469 Cr | Flat | Disbursement stable, but provisioning high |
| Wholesale Banking | ₹625 Cr | ▼ -6.1% | Risk-off mode continues |
| Treasury | ₹951 Cr | ▲ 54.6% | Benefit from investment gains |
| Other Ops | ₹84 Cr | ▼ -47% | Drop in ARC-related recoveries |
🔎 Institutional Ownership Trend
| Stakeholder | Jun ’25 | Mar ’25 | Trend |
|---|---|---|---|
| Promoter | 40.0% | 40.0% | Unchanged |
| FII | 29.5% | 30.1% | Marginal sell-off |
| DII | 25.1% | 24.7% | Increasing slowly |
FIIs are cautious amid NPA and margin concerns. However, DIIs are gradually adding on valuation grounds.
📈 Market Reaction: Muted Optimism
The stock reaction post-results was subdued. Analysts appreciated the QoQ profit uptick but flagged margin compression and asset quality issues.
Until Bandhan shows consistent improvement in asset performance and loan growth, the stock may remain in a range-bound zone.
📉 Valuation: Is the Stock Undervalued?
- P/B Ratio: ~0.9x — Below industry average
- P/E Ratio: 10–12x FY26E — Reasonable
- Conclusion: Valuation is attractive, but only for investors with a medium-to-long-term view who can stomach volatility.
🧭 Final Take: Should You Invest?
| Criteria | Verdict |
|---|---|
| Growth Visibility | ⚪ Neutral |
| Risk Profile | 🔴 High |
| Valuation Comfort | 🟢 Attractive |
| Strategy Direction | 🟡 Positive shift |
Recommendation: Watchlist the stock for now. Avoid aggressive buying unless asset quality stabilizes. For long-term investors, staggered SIP entries may be considered to average costs while monitoring improvements.
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