Kotak Buy recco reason
We took a call to be positive on the bank based on the following metrics, but note that the current development would weigh in a little to our reasons.
(1) There has been an improvement in asset-quality metrics in recent quarters, though stress is still higher than peers. While we have no visibility on the outcome of the independent audit, we made a macro call that the microfinance industry is largely returning to normalcy and Bandhan would soon follow suit.
(2) The liability franchise was largely unaffected by this crisis.
(3) The bank was steadily strengthening its senior management team, and our recent conversation suggested that the current team has the requisite experience to carry the bank forward.
(4) Mr Ghosh would continue to oversee the bank.
(5) Bandhan Bank was relatively inexpensive (given the above factors) in the segment in which it is operating. The risk-reward appeared to be favorable.
Bandhan_Bank_08April2024_Kotak_Insti.pdf (455.2 KB)
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