At a Glance
Bandhan Bank’s Q1FY26 was a mixed thali: deposits are rising, but low-quality calories. CASA is doing a swan dive, loans are shrinking, but somehow net profit is up nearly 482% YoY. It’s not a turnaround. It’s a magic trick. 🧙♂️
1. 📢 Introduction with Hook
Bandhan Bank was once the poster child of financial inclusion. Now it’s starting to look like the poster child of financial delusion. CASA ratio collapsing to 27%, loans down QoQ, gross NPAs flat — but net profit up? Either there’s some genius cost control, or… we’re in denial.
The market cap is ₹28,000 Cr. The book value is ₹151. The stock trades at just 1.16x BV.
But is it undervalued, or is it underdelivering?
2. 🤔 WTF Do They Even Do?
- Born as an MFI (Microfinance Institution), Bandhan morphed into a universal bank in 2015.
- Specializes in lending to underbanked and unbanked customers — especially women in rural/semi-urban India.
- Focus areas:
- 👩🌾 EEB (Emerging Entrepreneurs Business — basically microcredit)
- 🧑💼 Non-EEB (Retail, Housing, etc.)
- Mix of high-yield small-ticket loans and traditional banking products.
In short, it’s an MFI in a bank’s costume — and the costume’s starting to tear.
3. 💰 Financials – The Numbers Don’t Lie (But They Might Cry)
| Metric | Q1FY25 | Q4FY25 | Q1FY26 | QoQ Change | YoY Change |
|---|---|---|---|---|---|
| Loans & Advances | ₹1.26L Cr | ₹1.37L Cr | ₹1.34L Cr | 🔻 -2.5% | 🔼 6.4% |
| Total Deposits | ₹1.33L Cr | ₹1.51L Cr | ₹1.55L Cr | 🔼 2.3% | 🔼 16.1% |
| CASA Deposits | ₹44,456 Cr | ₹47,437 Cr | ₹41,859 Cr | 🔻 -11.8% | 🔻 -5.8% |
| CASA Ratio | 33.4% | 31.4% | 27.1% | 🚨 Freefall | 😱 Lowest Ever? |
| Net Profit | ₹54 Cr | ₹426 Cr | ₹318 Cr | 🔻 -25% | 🔼 482% YoY |
🧨 Gross NPA: 4.71% | Net NPA: 1.28%
📉 Interest Income is up — but so are expenses. That “EPS recovery” looks good until you realize it’s bouncing from the basement.
4. 🧮 Valuation – Cheap for a Reason?
| Metric | Value |
|---|---|
| CMP | ₹175 |
| P/E (TTM) | 10.3x |
| P/B | 1.16x |
| ROE | 11.9% |
| ROA | 1.49% |
| Dividend Yield | 0.86% |
| Fair Value Range (EduInvesting-estimated) | ₹160–₹195 |
Valuation looks reasonable on paper. But if CASA drops below 25%, P/E may not matter — sentiment will. At 1.16x BV, it’s not screaming buy me, but it is whispering at least I’m not Yes Bank.
5. 🍲 What’s Cooking?
- 🧾 Collection Efficiency steady: 97.7% across Pan Bank (EEB 97.6%, Non-EEB 98.1%)
- 🏦 LCR is strong at 178.3% — no immediate liquidity crisis
- 🚨 CASA is the real horror — dropping like Sensex during Covid
- 🛑 Loan book declined QoQ — unusual for a growth-focused bank
- 😮💨 Retail Term Deposits jumped 12% QoQ – depositors want safety, not services
- 🪙 Bulk deposits still rising — dangerous overreliance
- 📉 FIIs dumping: FII holding dropped from 35.6% → 22.7% in 2 years
6. 💣 Balance Sheet – How Fragile Is This Foundation?
- Deposits: ₹1.55L Cr
- Loans: ₹1.34L Cr → Loan-to-deposit ratio: ~86% (fair)
- Borrowings down to ₹11,138 Cr (from ₹24K Cr in FY23) — 🟢 good deleveraging
- Reserves up to ₹22,748 Cr — consistent buffer building
- But… contingent liabilities at ₹9,214 Cr? 👀
7. 💸 Cash Flow – Not a Happy Story
| Year | Operating CF | Investing CF | Financing CF | Net CF |
|---|---|---|---|---|
| FY25 | ₹2,752 Cr | -₹3,879 Cr | -₹5,475 Cr | -₹6,601 Cr |
| FY24 | ₹14,808 Cr | ₹1,691 Cr | -₹8,579 Cr | ₹7,921 Cr |
That sharp swing in net cash flow shows volatile balance sheet strategy. Last year was “save-the-cash”. This year? “Spend-it-and-pray”.
8. 📊 Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 12% |
| ROA | 1.49% |
| Net Interest Margin | ~7.2% (estimated, high due to MFI legacy) |
| CASA Ratio | 27.1% (🚨) |
| Cost-to-Income | Estimated 54–58% (rising) |
👎 CASA fall and high cost structure are hurting efficiency.
9. 🧾 P&L Breakdown – Show Me the Money
- Interest Income: ₹2,678 Cr (stable QoQ)
- Interest Expenses: ₹3,144 Cr (higher than income 🤡)
- Other Income: ₹700 Cr
- Net Profit: ₹318 Cr (YoY up 482%, but still less than Q4)
- EPS: ₹1.97
Financing Margin is negative again this quarter. This is not normal banking.
10. 🧮 Peer Comparison – Who Else Is in the Ring?
| Bank | P/E | ROE | CASA Ratio | GNPA | Net Profit (Qtr) |
|---|---|---|---|---|---|
| HDFC Bank | 21.7x | 14.5% | 44–45% | ~1.3% | ₹19,285 Cr |
| ICICI Bank | 20.2x | 18% | 43% | ~2.0% | ₹14,354 Cr |
| Axis Bank | 12.8x | 16.3% | 39% | ~2.2% | ₹7,509 Cr |
| Bandhan Bank | 10.3x | 11.9% | 27.1% | 4.7% | ₹318 Cr |
It’s not even a fair fight. The others are running marathons. Bandhan’s doing kabaddi with itself.
11. 🧍 Misc – Shareholding, Promoters, Red Flags
- Promoter holding steady at 39.98%
- FIIs fleeing like rats on a sinking ship
- DIIs cautiously buying more
- Public shareholding rising — possibly due to price dips
Notable: Resignation of Dr. A S Ramasastri, independent director. 🧠
12. 📉 EduInvesting Verdict™
Bandhan is not a disaster. But it’s no longer a darling either. It’s in that awkward teenage phase where the face is oily, the body’s growing weirdly, and no one knows what the future holds.
Yes, it’s profitable again. Yes, the CASA drop is brutal. Yes, the loan book declined. But…
If it can’t fix the CASA crash and retain retail trust, it risks becoming a glorified NBFC with a banking license.
🎯 Fair Value Range: ₹160–₹195
☠️ Below ₹160: CASA panic priced in
💡 Above ₹195: Only if CASA and loan growth reverse the trend
✍️ Written by Prashant | 📅 July 8, 2025
Tags: Bandhan Bank, Q1FY26 Results, CASA Ratio, Microfinance, Private Banks, EduInvesting
Where did you get the net profit of Q1 FY26? I dont think Bandhan has declared it yet.
https://www.bseindia.com/xml-data/corpfiling/AttachHis/ffc8038d-4d2f-4c20-b8e6-beabf8a05702.pdf
I’ll add a disclosure though