A Highly undervalued Bank with a 56% Upside, at 11-Month Low

  • Stock Market Analysis
  • Editors Pick

With the broader markets, banks are also taking a hit in today’s session. Those trying to find undervalued banks should have a look at Bandhan Bank (NS: BANH ) Limited. It is a private-sector lender with a market capitalization of INR 31,420 crore.

It has a strong presence in the country with over 1,542 branches, 438 ATMs and 4,598 banking units. FIIs are showing a growing interest in it and consequently ramped up their stake from 31.93% in the March 2023 quarter to 37.74% as of December 2023.

On the financial front, the bank posted a subdued 7.6% YoY jump in Q3 FY24 revenue to INR 5,210.6 crore, however, there was a mammoth 152.1% increase in net profit to INR 732.7 crore in the same period, translating into a profit margin of 14.06%.

The highlight of this stock is its current valuation. Firstly, from solely the price perspective, the stock is down 30% from its 52-week high of INR 272 and as Nifty Bank is trading near its all-time high, this correction can be capitalized.

Secondly, the valuation is also quite lucrative. The current TTM P/E ratio of the stock is a mere 10.53, which is almost half the sector’s average of 20.68. Competitors such as AU Small Finance Bank (NS: AUFI ) is trading at a more than double TTM P/E of 24.06.

Image Source: InvestingPro

But the biggest attraction for the stock is its fair value. As per 4 complex and high-quality data-driven financial models, the average intrinsic value of the stock is INR 297, which is a good 56% upside from the CMP of INR 190.

But not only that, the least intrinsic value of the stock is INR 282 which is also significantly higher than the current market price.

There is a high valuation gap here, which is what needs to be capitalized in order to become a good investor. Such times of fear are what distinguish astute investors from not-so-good ones.

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  • vijay katial @vijay katial
    The whole Bandhan team has been rejuvenated. it shall take time but shall come out of the dark very soon.
    Like 0
  • Satish More @Satish More
    Bandhan bank is not good bank for investors every time you buy it will cone down to bottom,just avoid shares and deposites also,dont open bank ac in this bank
    Like 0
  • Vinit Kumar @Vinit Kumar
    NPA to bbok value at 11.75. very bad
    Like 0
  • Veera Reddy @Veera Reddy
    talking about a bank is not complete without talking about current and potential NPA situation and the quality of loan book
    Like 2
  • Ravi Kant Chaturvedi @Ravi Kant Chaturvedi
    The market is supreme and it factors in all factors. Any model is just a mathematical modelling for the potential upward movement. Is a similar modelling available for a potential breakdown in future ?😉
    Like 3
    • Aayush Khanna @Aayush Khanna
      Yes, these financial models also spot overvalued stocks.
      Like 2
    • Emmanuel James @Emmanuel James
      Bandhan will double in two to four years...I'm buying at these levels..in heavy quantity..
      Like 0
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      100
  • Ravi Ghelada @Ravi Ghelada
    👍
    Like 1

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