Bandhan Bank stock surges 7% as RBI approves new MD & CEO, NCGTC to pay Rs 315 cr under CGFMU claim
Brokerages remained positive on the developments, believing that all near-term overhangs on the stock have been removed.
Bandhan Bank shares surged over seven percent in the morning session after the Reserve Bank of India (RBI) has cleared Partha Pratim Sengupta, to become the new Managing Director and CEO of a private bank.
Partha Pratim Sengupta accepted the position on October 9, 2024, and confirmed on October 10 that he would step down from his other engagements in compliance with the RBI’s terms and conditions. His three-year term is set to begin by November 10, 2024.
The appointment will be finalized after getting the green light from the bank’s Nomination and Remuneration Committee.
At 9.30 am, Bandhan Bank shares were quoting Rs 200.8 per share, higher by 7 percent on the NSE compared to the previous session’s closing price.
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Additionally, Bandhan Bank announced that the National Credit Guarantee Trustee Company (NCGTC) has completed a detailed forensic audit of its claims under the Credit Guarantee Fund for Micro Units (CGFMU) scheme. As of March 31, 2024, the total assessed payout stands at Rs 1,231.29 crore.
The bank had already received Rs 916.61 crore in December 2022. With this initial claim settled, the final payout as of March 2024 is Rs 314.68 crore, according to Bandhan Bank’s statement.
International brokerage Jefferies maintained its buy recommendation on Bandhan Bank with a target price of Rs 240 per share, citing the appointment of Partha Sengupta as Managing Director and CEO as a positive development.
Sengupta’s experience in West Bengal, a crucial market for the bank, is expected to strengthen its position. Additionally, the bank is set to receive Rs 320 crore from a CGFMU claim, with Rs 230 crore in recoveries, boosting its profitability and credibility.
With past stresses resolved and attractive valuations at 1.1 times FY26 adjusted price-to-book, Jefferies recommends staying buyers of the stock.
International brokerage Goldman Sachs also noted that the appointment of the MD and CEO, along with the resolution of the CGFMU claim removes all near-term overhang. The focus on Bandhan Bank now turns to its fundamentals, as investor uncertainty is removed around the continuity in business momentum, following the change in management.
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