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The Assam floods will have a near-term impact on Bandhan Bank's business as well as collections, according to Jefferies. The brokerage maintained its 'buy' rating on the stock with a target price of Rs 430 — implying an upside of almost 57 percent from Monday's closing price. Jefferies said it will watch out for the progress of rains in the state.

Bandhan Bank shares rose by as much as Rs 12.9 or 4.7 percent to Rs 287 apiece on BSE, amid an overall rebound in domestic equities after a sell-off that lasted six sessions in a row.

"While Assam is prone to such events, our conversations suggest this could impact the microfinance institution (MFI) business for the next 3-4 weeks, as 40 percent of the state has been materially affected by floods. Assam forms 6 percent of total loans and 9 percent of emerging entrepreneurs business (EEB) loans," Jefferies said.

A 500-basis-point rise in credit costs in the state will impact the lender's profit before tax by five percent in the year ending March 2023, according to the brokerage.

Bandhan Bank has the maximum market share in Assam.

Assam has been reeling under devastating floods for the last one week. The situation in the state remained bleak on Tuesday, with more than 47 lakh people being affected in 32 of its 36 districts.

A total crop area of 1,13,485.37 hectares has been destroyed.

(With inputs from PTI)

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First Published:Jun 21, 2022 2:16 PM IST