Bandhan Bank pips Yes Bank in market cap to become 7th most valuable bank

Mumbai: Kolkata-based Bandhan Bank Ltd on Wednesday became the seventh most valued listed lender, beating Yes Bank. Data from BSE showed that Bandhan Bank has a market capitalization of ₹ 84,325.35 crore, after its shares moved 1% higher on BSE to record high of ₹ 706.95. Yes Bank’s market cap stood at ₹ 84,262.14 crore. Its shares were trading at ₹ 365.70 on BSE, down 0.6% from its previous close.

HDFC Bank Ltd remained country’s most valuable bank with a market cap of ₹ 5.71 trillion followed by State Bank of India and Kotak Mahindra Bank Ltd with market cap of ₹ 2.67 trillion and ₹ 2.46 trillion respectively.

Bandhan Bank’s better-than-expected earnings as well as improved asset quality has helped its stock. It has a gross bad loan ratio of 1.26%, lowest among for Indian lenders.

A return on asset close to 3.5% and a net interest margin of above 10%, among highest for Indian lenders, too have helped. So despite trading at relatively high valuations of close to 5.9 times its expected book value for this fiscal, the stock has found favour with investors.

The stock gained 84% since listing on 27 March while the S&P Bankex, the broader gauge of banking stocks, rose 13.55% during the same period.

Among the analysts covering the Bandhan Bank stock, five have a “buy” rating, one have a “hold” rating. No brokerage has sell rating on the stock.

Mumbai-based Yes Bank continued to deliver a healthy performance on all major operational parameters for June quarter. On 26 July, it reported a profit which grew by 30.5% to ₹ 1,260 crore while net interest income rose 22.7% to ₹ 2,220 crore. Gross non-performing assets (NPAs) as a percentage of total loans stood at 1.31% in the quarter from 0.97% a year ago.

“Asset quality has stayed largely resilient for the bank across cycles but recently saw large pressure. Asset growth has remained strong. However, performance on margins and asset quality would be the key factor to watch, going ahead,” said ICICI Direct Research in a note to its investors.

“Large NPA related divergence observed by RBI in the last two years keeps us cautious on aggressive credit growth registered by the bank recently,” the report added. Among the analysts covering Yes Bank stock, 45 have a “buy” rating, five have a “hold” rating, while three have a “sell” rating, according to Bloomberg data.