Bandhan Bank Shares Rally Sharply Following Q3 Performance and Brokerage Upgrades
Bandhan Bank's share price experienced a significant upward movement on Friday, January 23, climbing over 5% during intraday trading. The stock reached a one-month high, marking its most substantial gain in nine months. This surge occurred despite broader market weakness, reflecting renewed investor optimism driven by brokerage upgrades from Motilal Oswal and JM Financial following the bank's December quarter (Q3FY26) results.
Q3 Financial Performance Highlights
Bandhan Bank reported a standalone net profit of ₹205.99 crore for Q3FY26, representing a sharp 83.9% sequential increase from the previous quarter. This improvement was supported by better margins and enhanced asset quality. Total income for the quarter rose 7.8% quarter-on-quarter to ₹6,122.24 crore.
However, on a year-on-year basis, profitability faced challenges. Net profit declined 51.6% YoY from ₹426 crore in the same quarter last year. Net interest income (NII) also decreased 4.5% YoY to ₹2,869 crore. Sequentially, NII showed positive momentum, growing 3.8% QoQ from ₹2,589 crore in Q2FY26. Net Interest Margin (NIM) improved modestly to 5.9% from 5.8% in the previous quarter.
Asset Quality Shows Notable Improvement
The bank demonstrated significant progress in asset quality during the quarter. Gross non-performing assets (GNPA) declined by 169 basis points to 3.3% in Q3FY26, down from 5% in Q2FY26. Net NPA also improved, falling 38 basis points to 1% compared with 1.4% in the previous quarter.
As of December 31, 2025, Bandhan Bank's total deposits stood at ₹1.57 lakh crore, showing 11% year-on-year growth from ₹1.41 lakh crore a year earlier.
Management Commentary and Future Outlook
MD & CEO Partha Pratim Sengupta commented on the quarterly performance, highlighting the steady progress made in recent quarters. "Bandhan Bank's third-quarter performance over the last quarters reflects the strengthening fundamentals and steady turnaround," Sengupta stated. "In Q4, we are set to accelerate multiple digital initiatives aimed at enhancing customer experience, operational efficiency, and scalability. We remain fully committed to building a strong, more resilient and more diversified bank. These efforts position us well for sustainable and profitable growth going forward."
Brokerage Reactions and Upgrades
Following the Q3 results, Motilal Oswal upgraded Bandhan Bank to 'Buy' with a target price of ₹175 per share, implying a 22% upside from Thursday's closing price. The brokerage noted that the bank had endured a prolonged NPA cycle that impacted growth and profitability, resulting in an average return on equity (RoE) of just 8% over the past five years. With asset quality stabilizing and margins normalizing, Motilal Oswal expects operating performance to improve meaningfully, projecting return on assets (RoA) of 1.3%–1.5% in FY27–FY28.
JM Financial also upgraded the stock to 'ADD' with a target price of ₹160. The brokerage highlighted an operating profit of ₹14.5 billion, driven by higher other income and margin expansion. While profit after tax rose 84% QoQ to ₹2.1 billion, it came in 10% below JM Financial's estimates due to elevated credit costs. Management maintained its FY27 exit credit cost guidance at around 1.6%–1.7% and guided for loan CAGR of 15%–17% over the next 2–3 years.
In contrast, HDFC Securities maintained a 'Reduce' rating with a revised target price of ₹130, citing higher-than-expected credit costs, muted deposit growth, and continued stress in the micro-banking portfolio.
Stock Price Performance and Trends
Bandhan Bank shares surged to ₹150.50 during Friday's session, representing a 5.5% intraday gain. Over the past year, the stock has remained largely flat but has faced pressure in the medium term, declining 17% in the last six months and 12% in the past three months. Over a five-year horizon, the banking stock has fallen 52%.
The stock touched its 52-week low of ₹128.15 in February 2025, with another low of ₹192.45 recorded in June 2025, highlighting the volatility investors have navigated during the bank's turnaround phase.
Disclaimer: The views and recommendations mentioned are those of individual analysts or broking companies, and not of Mint. Investors are advised to consult certified experts before making any investment decisions.
