Shares of Bandhan Bank surged over 9 percent in the early trade on Wednesday after the private lender reported its earnings for the fourth quarter of fiscal 2020. The stock gained 9.42 percent to hit an intraday high of Rs 256 per share on the BSE.

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Bandhan Bank on Tuesday reported a 20.5 percent fall in net profit in Q4FY20 to Rs 517.28 crore as against Rs 650.87 crore in the same period last year.

Net Interest Income (NII) for the quarter grew by 33.57 percent to Rs 1,680 crore as against Rs 1,258 crore, YoY. The net interest margin (NIM) during the quarter stood at 8.13 percent versus 7.9 percent, QoQ.

During the quarter the bank has taken COVID-19 related provision amounting to Rs 690 crore.

Asset quality of the bank during the quarter improved as gross NPAs fell sharply. However, a large part of the bank's loan book is under the three-month moratorium.

Gross NPA fell 16 percent to Rs 992.8 crore as against Rs 1,182 crore, QoQ. Gross NPA (as a percentage of gross advances) declined by 45 bps to 1.48 percent against 1.93 percent in the previous quarter.

Net NPA in the March quarter also declined 20.8 percent to Rs 389.4 crore from Rs 491.4 crore in the December quarter.

Kotak Institutional Equities upgraded the stock to Add from Reduce but cut the target price to Rs 270 from Rs 540 per share. The brokerage said that the steep decline in earnings QoQ was due to higher provisions for COVID while it believes that the headline metrics are stable though most loans are under moratorium.

The brokerage expects Bandhan Bank to have stable cost ratios in the medium term.

At 9:50 am, shares of Bandhan Bank rallied 4.36 percent to Rs 244.15 apiece on the BSE.

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