Bandhan Bank up 11%

Bandhan Bank was in sharp focus today, with the stock up about 9 to 11% around the Rs 194 to 198 band after a strong post-results reaction. The move comes despite a still-fragile tape for financials at times, suggesting investors are rewarding “direction of travel” in profitability and risk metrics rather than the FY26 headline decline.

The immediate trigger is Q4FY26 delivering a clean rebound in earnings quality: reported PAT rose 68% YoY to Rs 530 crore, helped by lower credit costs (2%, down 130 bps QoQ) and steadier asset quality (GNPA 3.3%, NNPA 1%). Balance-sheet momentum stayed healthy with gross advances up 13% YoY to Rs 1.54 lakh crore and deposits up 10% YoY to Rs 1.66 lakh crore, while the mix keeps improving, secured advances now 56% of the book (up sharply YoY) and retail deposits up 18% YoY, taking retail to 74% of deposits. Management’s forward tone also mattered: guidance of 14 to 15% loan growth and 10 to 20 bps NIM expansion is being read as confidence that the worst of margin pressure and credit normalization is past.

The more nuanced read is that the rally is also a relief trade on sustainability. Core trends are improving, but not uniformly: NIM at 6.2% is still lower YoY (down 46 bps) even as it improved sequentially, and operating profit was down YoY with OPEX/assets higher, implying the quarter’s PAT strength is still meaningfully provision/credit-cost led rather than a pure operating leverage story. That said, the bank’s deliberate shift toward secured lending, non-EEB growth and broader geographic diversification is reducing volatility in the risk profile, exactly what the market has been demanding from microfinance-origin lenders.

Bigger picture, Bandhan’s FY26 net profit fell 55% YoY to Rs 1,224 crore, so the market is effectively betting that FY27 is a normalization year: growth + a modest NIM uptick + contained credit costs could rebuild earnings power from a lower base. The key swing factors investors will watch from here are the trajectory of credit costs/provisions, ability to hold deposit franchise strength while improving CASA, and whether operating efficiency catches up with the balance-sheet expansion.

Bandhan Bank is a private sector lender that has been rebalancing its portfolio toward a more secured, diversified book while maintaining scale in retail-led liabilities.