Bandhan Bank has received a rating downgrade from Macquarie Securities, with the brokerage firm revising its investment outlook for the private sector lender. The change represents a significant shift in the analyst's assessment of the bank's investment prospects.

Rating Revision Details

Macquarie Securities has made notable changes to its coverage of Bandhan Bank, implementing both a rating downgrade and price target adjustment.

Investment Implications

The downgrade from Outperform to Underperform indicates that Macquarie now expects Bandhan Bank's stock to underperform relative to the broader market or sector peers. This represents a substantial shift in the brokerage's investment thesis for the bank.

The revised target price of ₹130.00 per share provides investors with Macquarie's updated valuation assessment for the stock. This price target will serve as a benchmark for the brokerage's expectations regarding the bank's share price performance in the near to medium term.

Market Context

Brokerage rating changes often influence investor sentiment and can impact trading activity in the affected stock. The downgrade to Underperform suggests that Macquarie has identified factors that may negatively impact the bank's performance or valuation in the current market environment.

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.