Bandhan Bank shares experienced a significant rally of 6% on January 23, 2026, reaching a one-month high of Rs 151.25 following the release of its third-quarter results for FY26. Despite reporting a substantial decline in net profit, the stock attracted positive attention from brokerages who remain optimistic about the bank's recovery trajectory and improved operational metrics.

Q3 FY26 Financial Performance

Bandhan Bank's Q3 FY26 results presented a mixed picture with contrasting year-on-year and sequential performance trends. The bank's financial metrics for the quarter revealed both challenges and recovery signs.

*Calculated based on reported percentage change

The most notable improvement came in asset quality, with the gross NPA ratio declining significantly to 3.33% in Q3 FY26 from 4.68% in the corresponding quarter of the previous year and 5.02% in the preceding quarter.

Balance Sheet Growth and Deposits

The bank demonstrated steady growth in its core business metrics despite profitability challenges. Deposits expanded by 11% year-on-year to Rs 1.57 lakh crore, while gross advances grew 10% YoY to Rs 1.45 lakh crore. This growth trajectory indicates sustained business momentum and customer confidence in the bank's services.

Brokerage Upgrades and Target Prices

Several prominent brokerages revised their ratings and target prices upward, reflecting confidence in the bank's recovery potential despite near-term challenges.

Recovery Outlook and Key Positives

Motilal Oswal highlighted that Bandhan Bank has undergone a prolonged NPA cycle that significantly impacted its growth and profitability profile, resulting in a tepid 8% average return on equity over the past five years. However, the brokerage expects the bank's operating performance to recover in coming quarters, with asset quality regaining normalcy and margins stabilizing.

JM Financial noted that despite the net profit missing estimates due to elevated credit costs, the current valuation of 0.7x FY28 price-to-book ratio suggests limited downside potential. CLSA emphasized that the bank's margin remained largely stable, providing relief after two quarters of sharp decline, while AUM growth picked up to 8% YoY from 6% YoY.

Market Response and Valuation

The positive market response, with shares jumping 6% from the previous closing price of Rs 142.46, reflects investor confidence in the bank's turnaround story. The rally brought the stock to Rs 151.25, its highest level in a month, suggesting renewed interest from market participants who view the improved asset quality metrics and brokerage upgrades as positive catalysts for future performance.

Bandhan Bank has unveiled its strategic growth guidance for the next two to three years during a recent conference call, outlining ambitious expansion plans across key business segments. The bank's management has set clear targets that reflect confidence in its operational capabilities and market positioning.

Growth Targets and Strategic Direction

The bank has established a comprehensive growth framework with specific targets for its lending portfolio. The management expects to achieve steady expansion while maintaining operational efficiency and risk management standards.

Lending Portfolio Expansion

Bandhan Bank's guidance indicates a robust 15% to 17% CAGR for advances over the projected timeframe. This growth trajectory suggests the bank's commitment to expanding its lending operations while maintaining prudent credit standards. The targeted growth rate reflects the management's confidence in identifying and capitalizing on lending opportunities across various customer segments.

Deposit Growth Strategy

The bank has projected that deposit growth will outpace advances growth during the guidance period. This strategic approach indicates a focus on strengthening the liability franchise and improving the overall credit-deposit ratio. Higher deposit growth relative to advances suggests the bank's emphasis on building a stable funding base to support future expansion plans.

Strategic Implications

The guidance provided during the conference call reflects Bandhan Bank's balanced approach to growth and risk management. By targeting higher deposit growth compared to advances, the bank aims to enhance its liquidity position and reduce dependence on external funding sources. This strategy could contribute to improved net interest margins and overall financial stability during the projected period.