Bandhan Bank: Buy or sell? Jefferies, CLSA, Macquarie see upside despite MFI stress and weak margins
Brokerages remain constructive on Bandhan Bank, despite a sharp year-on-year decline in profit and continued stress in the microfinance (MFI) segment. While earnings in Q1FY26 were impacted by elevated credit costs and subdued margins, analysts believe the worst may be behind, especially if the MFI cycle begins to turn.
Here's what the top brokerages are recommending: Jefferies – Buy | Target: ₹215 | Upside: 16%
Jefferies raised its target price and reiterated a Buy rating, even after cutting FY26 earnings by 6% and FY27/28 by 3%. The brokerage acknowledged the 65% YoY drop in Q1 profit, though noted that the result was slightly ahead of expectations due to better NII and lower credit costs. Loan growth is now skewed towards lower-margin secured segments, pressuring NIMs, but Jefferies sees reasonable valuations and believes a turnaround in the MFI cycle will be the key trigger. Macquarie – Outperform | Target: ₹210 | Upside: 13%
Macquarie maintained an Outperform rating, even as PAT missed estimates, driven by higher slippages and write-offs. The brokerage expects NIM to stay under pressure in the near term and warned of downside risk to FY26 RoA expectations (1.5%). Nonetheless, it continues to back the stock on the strength of its recovery prospects and franchise. CLSA – High Conviction Outperform | Target: ₹220 | Upside: 19%
CLSA maintained a High Conviction Outperform and sees 19% upside, even though Q1 core performance was weaker than expected. NII and PPOP missed estimates, while CASA ratio dropped by 400bps. CLSA believes the MFI book contraction will now slow, reducing pressure on margins. It expects the impact of June's repo rate cut to reflect from Q2, helping NIMs to bottom out, and sees credit costs materially improving in H2FY26. However, it cut estimates by 13–36% to reflect lower growth assumptions. Verdict: Buy calls dominate, MFI recovery key to rerating Brokerage Rating Target (₹) Upside (%) CLSA High Conviction Outperform 220 +19% Jefferies Buy 215 +16% Macquarie Outperform 210 +13%
While operational stress continues—especially in the MFI book and NIM profile—brokerages agree that valuation is supportive and that improving asset quality and margin stabilisation in H2FY26 could unlock further upside.
Disclaimer: The brokerage views expressed are based on publicly available research reports and do not constitute investment advice. Readers should consult a certified financial advisor before making any investment decisions.
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