🧠 At a Glance
Once hailed as India’s MFI-to-bank success story, Bandhan Bank is now struggling with falling margins, patchy profits, and a crisis of confidence. High NPAs, volatile earnings, and an FII exodus have shaken investor faith. Is this a turnaround bet or a ticking time bomb? RBI ne license diya, market ne bharosa nahi diya.
🏦 1. Bandhan’s Backstory: From Micro Loans to Mega Headaches
- 📍 Started as: Bandhan Financial Services Pvt Ltd — India’s largest NBFC-MFI (Microfinance Institution).
- 📅 Converted to bank: 2015, after RBI gave it a full banking license.
- 🧵 USP: Microloans to underbanked, unbanked, and often unrecoverable segments.
This was the pitch: “We serve Bharat, not India.”
Now it’s more like: “We serve bad debt, not profit.”
📉 2. What Went Wrong? (Spoiler: Everything)
Here’s the chart of doom:
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | ROE % | EPS ₹ | GNPA % | FII Holding |
|---|---|---|---|---|---|---|
| FY21 | 12,524 | 2,205 | 14% | 13.7 | ~8% | ~35% |
| FY22 | 13,872 | 126 | 1% | 0.78 | ~7% | 35.6% |
| FY23 | 15,905 | 2,195 | 12% | 13.6 | 4.9% | 28.3% |
| FY24 | 18,870 | 2,230 | 11% | 13.8 | 3.8% | 26.7% |
| FY25 | 21,948 | 2,745 | 12% | 17.0 | 4.7% | 22.7% |
⚠️ One good year, one bad year, one WTF year — rinse and repeat.
Also, FY22 profit of ₹126 Cr on ₹13,800 Cr revenue = someone call CID.
🤕 3. Margin of Error: Financing Margin Volatility
Let’s zoom into the most terrifying line item:
| Quarter | Financing Margin % |
|---|---|
| Mar ’22 | 40% (lol wow) |
| Sep ’22 | -5% (lol what?) |
| Dec ’22 | -17% (lol why?) |
| Mar ’23 | 10% |
| Mar ’24 | -12% |
| Mar ’25 | -7% |
Bhai, this is not a margin. This is a rollercoaster at Imagica.
Meanwhile, top banks like HDFC, ICICI, Kotak — solid, stable, boring. Bandhan? Comedy show.
💀 4. GNPA Drama: The Recurring Villain
- FY22: GNPA ~7.2%
- FY23: GNPA fell to 4.9% (good)
- FY25: GNPA back at 4.7% (why tho?)
- NNPA is still low at 1.28%, but provisioning coverage is unclear.
📌 Translation: “We’ll collect someday… probably… hopefully.”
🔁 5. Shareholding Panic: FIIs Rage Quit
| Quarter | FII Stake |
|---|---|
| Jun ’22 | 35.6% |
| Mar ’25 | 22.7% |
A clean 13% drop in institutional holding.
They’re not trimming — they’re running like there’s a fire in the vault.
Public holding? Climbing. Always a bad sign when retail is buying what FIIs are dumping.
🧮 6. Valuation: Looks Cheap, But So Is That Trap
- CMP: ₹180
- EPS (FY25): ₹17.0
- P/E: ~10.6x
- Book Value: ₹151 → P/BV: 1.19x
- Market Cap: ₹29,000 Cr
Seems like a deal? ONLY IF you ignore:
- Low ROE (11–12%)
- Margin inconsistency
- Asset quality head fakes
- Regulatory risk (RBI still watches MFIs with suspicion)
📉 7. Fair Value Range: Caution Ahead
| Scenario | EPS | P/E | FV Range |
|---|---|---|---|
| Base | ₹18 | 9–11x | ₹160–₹198 |
| Bull | ₹20 | 12–14x | ₹240–₹280 |
| Bear | ₹15 | 6–8x | ₹90–₹120 |
👉 At ₹180, you’re already paying fair-to-slightly-hopeful value.
👉 If the microfinance stress returns, expect a trip back to ₹120 levels.
🔥 8. EduInvesting Verdict: Beware
This isn’t just “high-risk-high-reward.”
This is “high-risk-sometimes-no-reward-also-Bimal-Jalan-might-call-you”.
Unless you’re into turnaround thrillers, this one’s best observed from a distance.
It may rise again — but don’t lose your peace waiting for it.
🏷️ Tags:
Bandhan Bank, Microfinance, Bad Loan Stocks, Private Bank India, Bandhan Financial Services, NPA Crisis, Turnaround Stocks India, High Risk Banking Stocks, EduInvesting Beware Series
✍️ Written by Prashant | 📅 June 21, 2025
