Will focus more on secured loans, as it looks to diversify loan book says Bandhan Bank’s Chandra Shekhar Ghosh

Will focus more on secured loans, as it looks to diversify loan book says Bandhan Bank’s Chandra Shekhar Ghosh

Update on the Indian Equity Market:

On Wednesday, NIFTY closed in the green at 9,383 (+2.0%). Top gainers in NIFTY50 were ZEEL
(+7.7%), Axis Bank (+7.0%) and ULTRACEMCO (+6.4%). The top losers were Nestle (-5.2%), Sun
Pharma (-2.2%) and Bharti Airtel (-1.1%). Sectoral gains were supported by Banks. Top sectoral
gainers were PSU Banks (+6.1%), Bank (+4.1%) and PVT Bank (+3.9%) and sectoral losers were
Pharma (-1.1%) and FMCG (-0.7%).

Excerpts of an interview with Mr. Chandra Shekhar Ghosh, CEO, Bandhan Bank Ltd with Financial
Express dated 13 th May 2020:

● Bandhan Bank expects around four weeks could be needed for normalisation of its
microfinance collections after the countrywide lock-down is lifted
● For microloan, 100% loan moratorium in value opted for April as they could not meet their
microfinance borrowers for collections due to the lock down.
● Around 79% of their microfinance borrowers have an average deposit balance of around Rs
3,070, which is equivalent to over four weekly instalments.
● Around 87% of their housing loan EMIs had come in April, while 65% (in value) of SME
instalments had come during the month. Around 41% (in value) of NBFC-MFI’s instalments
had been paid.
● They have started operations in microfinance business with opening offices in the green
zones across the country. They have disbursed some microfinance loans, though the amount
is very small.
● They will disburse more loans to micro-credit customers if they need because they know
their credit history for a long time. They have not yet started fresh disbursement in the non-
micro-credit sector (after the lock down is imposed).
● After restarting the operations, customers will look into their cash flow conditions.
Depending on that they will take a call on fresh loans.
● The faster the lock down is lifted, the faster they will get back to the pre-lockdown period in
terms of collections from different sectors. Until that happens there will be requirements for
supports from the RBI and the government. The loan moratorium has helped.
● Going forward, they would like to go for more diversification of their loan book, more
secured loan book than the current book.
● As of now, around 62% of their loan book is micro-credit. They would like to be more focus
on affordable housing and MSME sectors. Also, they would like to go for more geographic
expansion across the country.

Consensus Estimate: (Source: market screener and investing.com websites)

● The closing price of Bandhan Bank Ltd was ₹ 254/- as of 13-May-2020.  It traded at 2.3x/ 1.9x
the consensus earnings estimate of ₹ 111 /135 for FY21E/22E respectively.
● The consensus price target of Bandhan Bank Ltd is ₹ 316/- which trades at 2.3x the book value of
₹ 135/-

Disclaimer: The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisers to determine the merit, risks, and suitability of the information provided.

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