Whalesbook
Bandhan Bank's promoters are reportedly exploring a change of control, a significant strategic move for the bank as the broader microfinance sector shows signs of recovery. This suggests a proactive approach to leverage current market conditions and shape the bank's future.
Promoters Eye Stake Sale
Sources indicate that Bandhan Bank's promoters, holding a 39.74% stake, are hiring an investment bank to explore selling their control. Such a sale could attract strategic banking players interested in Bandhan Bank's substantial Eastern India deposit base and its profitable priority sector lending (PSL) portfolio, as well as private equity investors seeking a universal banking platform. Despite reporting an 84% quarter-on-quarter surge in net profit to ₹111.87 crore in Q3FY26 and a reduced gross Non-Performing Asset (NPA) ratio to 3.33%, the stock has seen volatility. On March 9, 2026, the share price closed down significantly from its intraday high, against average daily trading volumes around 8.3 million shares. This pursuit of a sale, even with recent performance gains, may signal promoters aiming to maximize valuation during the sector's upswing or seeking a larger entity for future growth and scale. The bank's market capitalization is around ₹29,500 crore as of early March 2026.
Microfinance Sector Navigates Recovery
The microfinance sector is undergoing a transition, balancing growth with risk management. While digital adoption and individual lending are increasing, loan delinquency rates, measured by Portfolio at Risk (PAR) 180+ days, have risen from 12.6% in March 2025 to 14.9% in June 2025. Bandhan Bank's CASA ratio has also declined to 27.26% in December 2025 from 31.73% a year earlier, indicating a shift in its deposit mix, although retail deposits grew 17.2% year-on-year. This evolving landscape, combined with robust M&A activity in the Indian financial sector (US$ 8 billion in deals in 2025), potentially fuels the strategic consideration for Bandhan Bank's sale. The RBI's permission for Indian banks to fund acquisition finance could also increase deal velocity.
Mixed Analyst Views and Valuation
Bandhan Bank currently trades with a Price-to-Earnings (P/E) ratio between 29.3 and 29.6 as of March 2026, indicating a moderate valuation compared to some fast-growing small finance banks. For context, AU Small Finance Bank has a market capitalization of approximately ₹71,146 crore, while HDFC Bank stands at over ₹13.5 lakh crore. Analyst sentiment is divided. Jefferies maintains a 'Buy' rating with a target of ₹175, while Ambit Capital has issued a 'Sell' rating with a target of ₹130. Motilal Oswal holds a 'Neutral' stance with a ₹175 target, anticipating Return on Assets (RoA) recovery. This divergence suggests varied opinions on the bank's ability to manage costs and grow deposits amidst sector challenges, even with strong M&A activity in Indian finance.
Concerns and Challenges Remain
Several factors contribute to a cautious view. The departure of its founder MD & CEO in April 2024 raised concerns about leadership transition, leading analysts from Jefferies and Nomura to downgrade the stock at the time. The bank's declining CASA ratio poses a challenge for managing funding costs in a competitive market. Furthermore, while Bandhan Bank's reported NPA ratio improved to 3.33% in Q3FY26, the broader microfinance sector faces rising delinquency rates. MarketsMOJO had downgraded the stock to 'Sell' in January 2026 due to poor technicals and performance, later revising it to 'Hold' in February 2026 as technicals and valuation improved. The stock's 52-week range of ₹134.25 to ₹192.48 shows its historical volatility and the market's sensitivity to its price. The Reserve Bank of India's recent approval for SBI Mutual Fund to acquire up to 9.99% also underscores regulatory attention on banking ownership structures.