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Bandhan Bank Shares Crash 14% Despite Higher Q1 Profit; Brokerages Turn Cautious After Outlook Cut

Posted on 22nd Jul 2026 02:50 pm by rohit kumar

Bandhan Bank surprised investors after reporting a 35% year-on-year increase in net profit for the April–June quarter. Despite the better earnings, the bank's shares fell as much as 14% during Tuesday's trading session as investors reacted negatively to management's weaker outlook.

 

The stock opened at ₹187.75, sharply lower than the previous close of ₹208.60, and declined to an intraday low of ₹179.25.

 

The sharp fall indicates that investors focused more on the bank's future guidance than on its quarterly profit growth.

 

Q1 FY27 Results: Profit Increases to ₹502 Crore

 

Bandhan Bank reported a healthy improvement in net profit during the first quarter of FY2026-27.

 

Financial Highlights

Net Profit: ₹502 crore (▲35% YoY)

Net Profit (Year Ago): ₹372 crore

Provisions: ₹683 crore (▼41% YoY)

Previous Year Provisions: ₹1,147 crore

 

The rise in profit was mainly driven by a significant decline in provisioning requirements.

 

However, the bank's operating profit declined by 19%, primarily because of higher operating expenses.

 

Why Did the Stock Fall Despite Higher Profit?

 

While quarterly earnings were stronger, management issued a more cautious outlook for the coming quarters.

 

The bank reduced its Return on Assets (RoA) guidance, signalling that profitability could remain under pressure.

 

Updated RoA Guidance

Previous Guidance: 1.6%–1.8%

Revised Guidance: 1.2%–1.4%

 

The revised outlook dampened investor sentiment and overshadowed the positive earnings performance.

 

Key Risks Highlighted by Management

 

During the post-results earnings call, the management identified several factors that could affect future performance.

 

These include:

 

Higher cost of deposits

Pressure on net interest margins

Uncertain global economic environment

Monsoon-related risks

Increased technology investments

 

The bank also indicated that these factors may impact profitability over the next few quarters.

 

Loan Growth Guidance Also Reduced

 

Management lowered its expectations for loan growth by guiding toward the lower end of its earlier target range.

 

The revised outlook raised concerns about the bank's growth trajectory, prompting several brokerages to reassess their recommendations.

 

Brokerages React to Bandhan Bank's Results

Motilal Oswal

 

Motilal Oswal downgraded the stock from "Buy" to "Hold".

 

Brokerage View

Rating: Hold

Previous Rating: Buy

Target Price: ₹225

 

The brokerage cited weaker management guidance and reduced its FY2027 and FY2028 earnings estimates.

 

JP Morgan

 

JP Morgan maintained its "Neutral" rating.

 

Target Price

₹175 per share

 

The brokerage noted that the revised profitability and loan growth guidance were the key concerns emerging from the earnings call.

 

Nomura

 

Nomura also maintained a "Neutral" rating.

 

Target Price

₹190 per share

 

The brokerage preferred to remain cautious until there is greater clarity on earnings growth and margin trends.

 

Why Investors Are Concerned

 

Although Bandhan Bank delivered higher profits, investors remain focused on future earnings potential.

 

Key concerns include:

 

Lower profitability guidance

Margin pressure from higher funding costs

Slower expected loan growth

Rising operating expenses

Technology investment costs

 

These factors contributed to the sharp decline in the stock despite the improvement in quarterly earnings.

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