Bandhan Bank shares hit fresh low amid uncertainty over top post; more downside likely?

Bandhan Bank shares hit fresh low amid uncertainty over top post; more downside likely?

Shares of Bandhan Bank are on a downward trajectory since the lender’s MD  and CEO  Chandra Shekhar Ghosh announced on April 5 that he would retire from the services of the bank as from the top post upon completion of his current tenure on July 9, 2024. Bandhan Bank stock has lost 12.15% till date since the close of Rs 197.40 on April 5 this year.

It fell to a fresh 52-week low of Rs 173.40 in the current session, down 1.44% from the previous close of Rs 175.95 on BSE. With today’s correction, the banking stock has lost 28.64% in 2024.

In comparison, Nifty bank is down 1.72% this year.

The banking stock is trading neither in the oversold zone nor in the overbought zone with its relative strength index (RSI) at 35.8.

The banking stock has lost 15 per cent in one year and fallen 46.56 per cent in two years. Bandhan Bank shares are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

A total of 6.97 lakh shares of the lender changed hands, amounting to a turnover of Rs 12.19 crore on BSE. The stock hit a 52-week high of Rs 272 on June 1, 2023. It is trading 36.25% lower to the yearly high.

The abrupt retirement of Ghosh from the top post has come as a dampener for the banking stock.

Santosh Meena, Head of Research at Swastika Investmart sees support for the banking stock at Rs 180-160 levels.

“Bandhan Bank is currently experiencing a pronounced downtrend, with indications pointing towards a potential bottoming out near the Covid lows in the range of Rs 180-160 per share. However, the stock faces formidable resistance within the Rs 200-210 supply zone, presenting a significant challenge. Only a sustained breakthrough above the Rs 210-mark holds the potential for a short-term trend reversal, paving the way towards the Rs 250 level,” said Meena.

On the other hand, global brokerage Jefferies has downgraded Bandhan Bank to ‘Underperform’ with a price target of Rs 170. The brokerage trimmed its growth outlook and credit cost estimates for FY25-26 and reduced its earnings per share (EPS) estimates by 10-14 per cent.

The stock will witness an overhang in the near term until clarity emerges on the leadership issue, said Nirmal Bang adding that the existing leadership was fairly new to the bank there was uncertainty over succession plans after the resignation effective from July 9.

“Valuations are inexpensive at 1.3 times FY25E P/ABV (x) and 1.1 times FY26E Accredited in Business Valuation (ABV) respectively considering the projected Return on Assets (RoA) in excess of 2 per cent and Return on Equities (RoE) of 16-17 per cent,” said Nirmal Bang.

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