🪞At a Glance
Once the poster boy for financial inclusion, Bandhan Bank has now become a classic case of too much loan, too little caution. With GNPA swings wild enough to rival crypto charts, profit margins tanking below sea level, and promoter equity eternally stuck at 39.98%, this ex-MFI darling is flashing more red flags than a communist rally.
🧠 1. The Backstory – From Dhoti to Demat 📜
- Born as Bandhan Financial Services Pvt. Ltd in 2006
- Crowned India’s largest NBFC-MFI by 2014
- Received full banking license in 2015
- IPO in 2018 priced at ₹375 (current CMP = ₹175… oops)
- Market Cap has slipped to ₹28,211 Cr
It went from being India’s financial savior to the stock market’s favourite sob story.
🔍 2. What Went Wrong – The Profit Yo-Yo 📉
Let’s look at the quarterly profit chart:
| Quarter | Net Profit (₹ Cr) | Financing Margin |
|---|---|---|
| Jun 2022 | ₹886 | 21% |
| Sep 2022 | ₹209 | -5% |
| Dec 2022 | ₹291 | -17% |
| Mar 2023 | ₹808 | 10% |
| Sep 2023 | ₹721 | 9% |
| Mar 2024 | ₹55 | -12% |
| Jun 2024 | ₹1,063 | 16% |
| Mar 2025 | ₹318 | -7% |
💡 Takeaway: Profit swings from ₹1,900 Cr highs to ₹55 Cr lows, with margins falling below zero in multiple quarters. You’re not reading Zomato’s earnings.
📦 3. NPA Ka Mahabharat – Gross NPA Plot Twists 📉
- Gross NPA peaked at 7.32% in Sep 2023
- Even after clean-up efforts, it’s still 4.71% as of Mar 2025
- Net NPA is at 1.28%, not disastrous… but not comforting either
📉 NPA volatility tells you this bank is still recovering from its own loan-book trauma.
🏦 4. Promoter Holding = 39.98% Forever 🔒
- Since 2018, promoter stake is stuck at 39.98%
- SEBI rules forced dilution from 82% to sub-40%
- But here’s the kicker: Promoters haven’t bought a single extra share despite the crash from ₹375 to ₹175.
👀 Why so shy, boss?
🧾 5. Interest Income Up, But So Are Worries
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) |
|---|---|---|
| FY20 | 10,885 | 3,024 |
| FY21 | 12,524 | 2,205 |
| FY22 | 13,872 | 126 (!!) |
| FY23 | 15,905 | 2,195 |
| FY24 | 18,870 | 2,230 |
| FY25 | 21,948 | 2,745 |
💣 FY22 was a net profit cliff-dive — only ₹126 Cr
📈 FY25 finally looks “normal”, but the scars remain
📉 6. ROE, ROCE – Not Worth Writing Home About
| Metric | Value |
|---|---|
| ROE (5Y Avg) | 10% |
| ROE (FY25) | 12% |
| ROCE | 7.83% |
| P/B Ratio | 1.16x |
A sub-8% ROCE for a bank is like a Ferrari with three flat tires.
📛 7. Beware These 🚩 Red Flags
| 🚩 Red Flag | EduInvesting Comment |
|---|---|
| Wild profit volatility | -900 Cr to +1000 Cr in 2 years |
| Net margins regularly negative | Is this a PSU or a bank? |
| GNPA rollercoaster | 7.32% to 4.71% – not stable |
| Contingent liabilities ₹9,214 Cr | That’s more than annual profit |
| FIIs running away | 36% in 2022 → 22% now |
| Book value = ₹151, Price = ₹175 | Valuation is low for a reason |
🧮 8. Fair Value Estimation – If We’re Being Nice
Let’s be generous.
- FY25 EPS = ₹17
- Assign PE of 8–10x (volatile, micro-loan heavy, risky book)
| Scenario | EPS | P/E | Fair Value |
|---|---|---|---|
| Base Case | ₹17 | 8x | ₹136 |
| Bull Case | ₹17 | 10x | ₹170 |
🎯 EduInvesting Fair Value = ₹136 – ₹170
CMP = ₹175
🔻 Overvalued by ~3–22% even in optimistic cases
💀 9. What You Should Really Worry About:
- 🧨 Low-interest coverage
- 📉 EPS stagnated at ₹13–₹17 range for 5 years
- 👎 PE ratio of 10 is low for a reason – market doesn’t trust it
- ❌ Even FY25 growth didn’t fix valuation gap
- 🏃 FIIs, public, even DIIs trimmed exposure
🧠 TL;DR: This is Not the Bandhan You Want to Tie 🎗️
- Once a financial rockstar, now a serial underperformer
- Despite revenue growth, core profitability is weak
- Dividends? Barely 0.86% yield – LOL.
- EPS? Meh. Margins? Meh. Volatility? Chef’s kiss 💋
📛 Verdict:
If you want to invest in a bank that behaves like a volatile startup but with the glamour of a failed PSU — Bandhan’s your man.
Otherwise, stay alert. Stay away. Or at least, don’t marry this one.
✍️ Written by Prashant | 📅 June 18, 2025
Tags: Bandhan Bank Beware, Bandhan Bank valuation, GNPA problems, Bandhan profit crash, risky banks India, financial red flags, EduInvesting beware series, Bandhan stock review, PE valuation Bandhan Bank
