Bandhan Bank Shares Plunge Over 15% After Slashing Profitability Outlook

Shares of Bandhan Bank (NSE: BANDHANBNK) plunged as much as 15.4% on Wednesday after the private-sector lender unexpectedly slashed its profitability guidance for the fiscal year, triggering a wave of analyst downgrades and heavy selling pressure.

Guidance Cut Overshadows Earnings Beat

The sharp decline followed the company's first-quarter earnings call on Tuesday, where management revised its fiscal year 2027 exit return-on-assets (ROA) guidance downward. The bank now projects an ROA of 1.2% to 1.4%, a significant reduction from its previous forecast of 1.6% to 1.8%.

This downbeat outlook blindsided investors and overshadowed the bank's reported Q1 results. For the quarter, Bandhan Bank posted a 35% year-on-year increase in net profit to ₹501.67 crore. However, this was largely attributed to a sharp fall in provisions for bad loans rather than strong underlying operational performance.

Margin and Cost Pressures Mount

Management detailed several headwinds that prompted the guidance revision. The bank's pre-provisioning operating profit fell nearly 19% year-on-year, reflecting pressure on its core business. Key challenges cited on the earnings call include:

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• Net interest margins (NIMs) are expected to remain compressed due to higher costs for deposits.
• Operating costs were well above expectations, driven by elevated technology spending and annual wage revisions.

Adding to the uncertainty, Bandhan Bank announced its Chief Financial Officer is scheduled to step down in late September 2026. The move introduces management transition risk at a critical time for the lender.

Market Reaction and Analyst Downgrades

The negative forecast triggered swift action from market analysts. Motilal Oswal downgraded the stock to a Neutral rating, while at least one other domestic brokerage cut its rating to Hold from Buy, both citing the diminished profitability trajectory. The sell-off occurred on exceptionally heavy trading volume, indicating significant institutional selling.

The broader Indian market offered little support, with the BSE Sensex declining only modestly. This left Bandhan Bank to absorb the stock-specific selling pressure, making it one of the day's worst performers.