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Bandhan Bank Shares Crash 17% Despite 35% Profit Jump; Lower FY27 Guidance Shakes Investor.

Posted on 23rd Jul 2026 11:17 am by rohit kumar

Bandhan Bank shares came under heavy selling pressure on Wednesday, plunging more than 17% after the private lender lowered its Return on Assets (RoA) guidance. Although the bank reported a 35% year-on-year rise in net profit for the April–June quarter, investors focused on weaker future earnings expectations, triggering a sharp decline in the stock.

 

The management cited an uncertain global economic environment and intense competition for deposits as the key reasons behind the revised outlook.

 

Bandhan Bank Q1 Results: Profit Rises 35%

 

Bandhan Bank reported strong headline earnings for the first quarter of FY2026-27.

 

Q1 FY27 Financial Highlights

Net Profit: ₹502 crore (▲35% YoY)

Quarter-on-Quarter Profit: ▼6%

Net Interest Income (NII): ₹2,920 crore (▲6% YoY)

Operating Profit: ₹1,358 crore (▼19%)

Net Interest Margin (NIM): 6.2% (down 16 basis points)

Provisions: ₹683 crore (▼41% YoY)

 

The rise in profit was mainly driven by a significant reduction in provisions rather than stronger core operating performance.

 

Why Did Bandhan Bank Shares Fall?

 

Despite reporting higher profits, the stock witnessed a sharp sell-off because management revised its profitability outlook downward.

 

RoA Guidance Cut

 

Bandhan Bank reduced its FY2026-27 Return on Assets (RoA) guidance:

 

Earlier Guidance: 1.6%–1.8%

Revised Guidance: 1.2%–1.4%

 

The lower profitability target disappointed investors and overshadowed the strong quarterly earnings.

 

Reasons Behind the Guidance Cut

 

According to the management, the key challenges include:

 

Uncertain global economic conditions

Rising competition for customer deposits

Higher deposit interest rates

Pressure on net interest margins

 

These factors are expected to impact profitability over the coming quarters.

 

Asset Quality Shows Improvement

 

Despite concerns over future earnings, the bank's asset quality improved during the quarter.

 

Asset Quality Highlights

Gross NPA (GNPA): Improved to 3.1% from 3.3%

Net NPA (NNPA): Declined to 0.9% from 1.0%

 

On a year-on-year basis:

 

GNPA improved by 182 basis points

NNPA improved by 43 basis points

 

The improvement indicates better recovery and lower stress in the loan portfolio.

 

Why Did Operating Expenses Rise?

 

Managing Director Partha Pratim Sengupta attributed higher expenses to:

 

Increased employee costs

Around 65% growth in technology-related spending

Additional technology investments amid geopolitical tensions in West Asia

 

Higher operating expenses weighed on the bank's operating profit during the quarter.

 

Motilal Oswal's View on Bandhan Bank

 

Brokerage firm Motilal Oswal Financial Services maintained a "Neutral" rating on the stock.

 

Brokerage Outlook

Rating: Neutral

Target Price: ₹225

 

The brokerage acknowledged that Bandhan Bank's quarterly profit exceeded expectations but noted that the improvement was largely due to lower provisioning.

 

Key Concerns

 

Motilal Oswal expects:

 

Around 30 basis points decline in Net Interest Margin (NIM)

Approximately 10 basis points increase in operating expenses

Slower profitability growth in the coming years

 

The brokerage also reduced its earnings estimates:

 

FY2026-27: Down by 14%

FY2027-28: Down by 6%

 

It now forecasts:

 

FY2026-27 RoA: 1.0%

FY2027-28 RoA: 1.4%

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