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Bandhan Bank's stock experienced a significant surge in the morning session, climbing over seven percent after the Reserve Bank of India (RBI) gave its approval for Partha Pratim Sengupta to assume the role of Managing Director and CEO of the private bank. This appointment signifies a pivotal moment for Bandhan Bank, ushering in a new era of leadership and potentially impacting the bank's future trajectory.
Sengupta's acceptance of the position on October 9, 2024, followed by his confirmation of stepping down from other commitments on October 10, underscores the seriousness and urgency of the transition. The three-year term is set to commence by November 10, 2024, following formalization by the bank's Nomination and Remuneration Committee.
The positive market reaction to Sengupta's appointment is evident in the stock's performance, trading at Rs 200.8 per share at 9.30 am, a seven percent increase compared to the previous session's closing price. This surge indicates investor confidence in Sengupta's leadership and his potential to guide Bandhan Bank towards continued growth.
Beyond the appointment of the new CEO, Bandhan Bank announced the successful completion of a detailed forensic audit by the National Credit Guarantee Trustee Company (NCGTC) concerning its claims under the Credit Guarantee Fund for Micro Units (CGFMU) scheme. This audit resulted in an assessed payout of Rs 1,231.29 crore, of which Rs 916.61 crore was already received in December 2022.
The remaining Rs 314.68 crore, representing the final payout as of March 2024, adds further positivity to Bandhan Bank's financial outlook. This positive news is amplified by the international brokerage Jefferies' maintained 'buy' recommendation for Bandhan Bank, accompanied by a target price of Rs 240 per share. Jefferies cites Sengupta's appointment as a positive development and highlights his experience in West Bengal, a crucial market for the bank, as a strength.
The additional Rs 320 crore expected from the CGFMU claim, alongside Rs 230 crore in recoveries, is projected to enhance the bank's profitability and credibility. With past challenges addressed and attractive valuations at 1.1 times FY26 adjusted price-to-book, Jefferies advises investors to remain buyers of the stock.
International brokerage Goldman Sachs also echoes the positive sentiment, emphasizing that the appointment of the MD & CEO and the resolution of the CGFMU claim alleviate any immediate uncertainty for investors. The focus now shifts towards Bandhan Bank's fundamental performance, as investor concerns regarding business continuity following the management change have been addressed.
The news surrounding Bandhan Bank paints a picture of positive momentum. The appointment of a new CEO with proven experience and the successful resolution of the CGFMU claim have the potential to bolster investor confidence and contribute to the bank's growth trajectory. As Bandhan Bank enters this new chapter, its future performance will be closely observed by stakeholders and investors alike.
Source: Bandhan Bank stock surges 7% as RBI approves new MD & CEO, NCGTC to pay Rs 315 cr under CGFMU claim