Bandhan Bank shares surged 3.90% to touch an intraday high of ₹150.05 during Monday's trading session, following the release of its provisional business update for the quarter ended December 31, 2025. The private sector lender demonstrated strong retail deposit momentum with retail deposits growing 17.20% year-on-year to ₹1,13,420 crore, now comprising 72.37% of total deposits, while maintaining robust liquidity coverage ratio at 149.14%.

Strong Stock Performance and Market Response

The bank's shares responded positively to the quarterly business update, with investors showing confidence in the steady credit expansion and operational improvements.

The stock is currently trading at ₹150.05, significantly below its 52-week high of ₹192.48, with a price-to-earnings ratio of 18.95 and price-to-book ratio of 0.96, suggesting relatively reasonable valuation compared to book value.

Outstanding Loan Growth and Deposit Performance

Bandhan Bank reported steady lending momentum with loan growth returning to double digits, supported by strong deposit mobilization across retail segments.

Loans and advances grew 10.00% year-on-year to ₹1,45,227 crore, while total deposits increased 11.10% to ₹1,56,723 crore, though deposits declined marginally by 0.90% quarter-on-quarter.

Strategic Retail Focus and Deposit Mix Transformation

The bank's retail deposit strategy delivered impressive results, with retail deposits now comprising 72.37% of total deposits, reflecting successful execution of its retail-focused strategy.

Retail term deposits emerged as the standout performer with 35.80% year-on-year growth to ₹70,690 crore. However, the CASA ratio declined to 27.26% from 31.73% year-on-year, indicating higher dependence on costlier deposits which could impact margins.

Improved Operational Efficiency and Technical Outlook

Bandhan Bank showed enhanced collection efficiency across all business segments, with pan-bank collection efficiency improving to 98.10% from 97.80% in the previous quarter.

The Emerging Entrepreneurs Business segment showed notable improvement to 98.00% from 97.50%, providing additional comfort to investors and supporting the stock's upward movement. From a technical perspective, the 14-day Relative Strength Index stands at 43.10, placing the stock in neutral zone. The bank is trading below four out of its eight key simple moving averages, indicating a mildly bearish bias in the short to medium term, though the strong quarterly performance has provided positive momentum.

Bandhan Bank has completed a major portfolio cleanup by offloading bad loans worth ₹6,872.36 crore to asset reconstruction companies for a total consideration of ₹901.72 crore, according to an exchange filing on Monday. The strategic move involves disposing of non-performing assets (NPAs) and written-off loan portfolios from the bank's Emerging Entrepreneurs Business segment.

NPA Portfolio Sale to ARCIL

The bank sold its unsecured NPA portfolio with principal outstanding of ₹3,165.25 crore to Asset Reconstruction Company (India) Ltd. (ARCIL) for ₹569.75 crore. ARCIL emerged as the winning bidder under the Swiss Challenge Method, with the transaction structured on Security Receipts basis.

The security receipts subscription was divided between ARCIL taking 53.25% amounting to ₹303.39 crore, while Bandhan Bank retained 46.75% worth ₹266.36 crore.

Written-Off Loan Portfolio Transaction

In a separate transaction, Bandhan Bank offloaded its unsecured written-off loan portfolio valued at ₹3,707.11 crore to Phoenix ARC Pvt. for ₹331.97 crore. Phoenix ARC secured the deal as the highest bidder through an auction process.

Phoenix ARC subscribed to 37.84% of security receipts amounting to ₹125.60 crore, while Bandhan Bank retained 62.16% of SRs worth ₹206.37 crore.

Portfolio Composition and Business Impact

The disposed portfolios belonged to Bandhan Bank's Emerging Entrepreneurs Business segment and included:

• Group loans
• Small business loans
• Agricultural loans
• Aspiring business groups financing

Both portfolios consisted entirely of unsecured lending products, representing the bank's strategic focus on cleaning up its balance sheet by transferring problematic assets to specialized reconstruction companies.

Market Performance

Shares of Bandhan Bank closed 0.67% higher at ₹146.05 on the National Stock Exchange on Monday, outperforming the benchmark Nifty which declined 0.38%. However, the stock has fallen 8.18% on a year-to-date basis, reflecting broader market challenges.

Analyst sentiment remains mixed with 11 out of 28 analysts maintaining 'buy' ratings, 11 recommending 'hold', and six suggesting 'sell' according to Bloomberg data. The average 12-month price target implies a potential upside of 20.70% from current levels.