The broking firm Motilal Oswal has maintained a ‘Neutral’ rating on the stock of Bandhan Bank. It also kept the target price unchanged at Rs 190 a piece. The brokerage house iterated its rating and price target after the bank’s managing director and chief executive officer, Shekhar Ghosh, announced retirement upon completion of his tenure on July 09.
The bank is now searching successor for Shekhar Ghosh before the completion of his tenure. The resignation of Ghosh came as a surprise for markets as the board of the bank had approved his name, recently, for another term. The bank will now have to submit a shortlist of names to the RBI for approval before his tenure is completed, “this may entail the evaluation of external candidates as well,” said the brokerage firm.
The top-level exit will drag the growth of the bank in FY25. It has already witnessed a lot of changes in the upper management. The bank recently hired various people for leadership roles. Motilal expects that the resignation of MD will delay the recovery in underlying business and earnings. “Additionally, the outcome of the CGFMU audit remains another near-term overhang.” the brokerage house said.
The bank’s execution focuses on continued diversification of loan book while improvement in asset quality is expected to drive earnings, said Motilal in its research report.
Another brokerage house Equirus Securities said it sees limited downside given the current valuations and as most asset quality issues are already behind for the bank.
Also, Bandhan Bank has been able to attract a proven talent pool in the last couple of years to drive the next leg of growth. “That said, the stock could be sidelined till clarity on the new MD & CEO emerges. We remain watchful of the developments at Bandhan and put the stock under review,” Equirus said. Earlier, it had a long view on the stock.