Reviews

In this edition, we have reviewed Bandhan Bank Ltd. and State Bank of India We suggest our reader-investors to HOLD in Bandhan Bank Ltd. and State Bank of India 

We had previously recommended Bandhan Bank in Volume No. 34, Issue No. 2, dated December 24, 2018 – January 6, 2019, under the ‘Choice Scrip’ segment. The stock was then trading at Rs556 and was recommended based on good growth prospects and higher profitability. Bandhan Bank is a universal bank, which has 4,701 banking outlets pan-India serving more than 2.08 crore customers.

On the quarterly front, the net interest earned by the bank in the second quarter of FY21 came in at Rs1,923.09 crore as against Rs1,529.04 crore in the corresponding quarter of the previous fiscal, an increase of 25.77 per cent.

The total income in Q2FY21 was Rs3,579.39 crore, an increase of 17.34 per cent from Rs3,050.55 crore in Q2FY20.

The profit after tax fell by 5.33 per cent to reach Rs920.01 crore in Q2FY21 as against Rs971.80 crore in Q2FY20. Net interest earned by the bank in FY20 came in at Rs6,323.91 crore, an increase of 40.67 per cent from Rs4,495.42 crore in FY19.

The total income earned by the bank in FY20 was Rs12,434.69 crore, an increase of 61.36 per cent from Rs7,706.42 crore earned in the previous fiscal.

The profit after tax in FY20 increased by 54.94 per cent to reach Rs3,023.74 crore as against Rs1,951.50 in FY19. Deposits and loan portfolio has grown in terms of year-on-year figures. There is a reduction in GNPA and NNPA as compared to the YoY figures. The bank has witnessed a robust rural performance and an all-round improvement in collection and disbursement. Hence, we recommend HOLD.

We had previously recommended State Bank of India in Volume No. 34, Issue No. 26, dated November 25 – December 08, 2019, under the ‘Cover Story’ segment. The stock was then trading at Rs328.70 and was recommended based on the company’s sturdy growth momentum across segments, better performance than peers. State Bank of India is the largest public sector bank. On the quarterly front, the net interest earned by the bank in Q2FY21 came in at Rs31,019.83 crore as against Rs27,251.14 crore in Q2FY20, an increase of 13.83 per cent.

The total income in Q2FY21 was Rs95,373.50 crore, an increase of 6.74 per cent from Rs89,347.91 crore in Q2FY20.

The profit after tax rose by 48.22 per cent to reach Rs5,403.81 crore in Q2FY21 as against Rs3,645.83 crore in Q2FY20.

Net interest earned by the bank in FY20 came in at Rs1,08,727.86 crore, an increase of 6.53 per cent from Rs97,454.71 crore in FY19. The total income earned by the bank in FY20 was Rs3,62,229.09 crore, an increase of 9.69 per cent from Rs3,30,220.88 crore earned in the previous fiscal.

The profit after tax in FY20 increased by 492.26 per cent to reach Rs18,176.83 crore as against Rs3,069.07 in FY19.

Asset quality has improved with NPA ratios coming down. There is visibility about recoveries in the near term and the moratorium book has come down. Non-banking subsidiaries are also fuelling growth. The net interest margin has also improved. Hence, we recommend HOLD.

(Closing price as of Dec 01, 2020)