Bandhan Bank Stumbles as CEO Departs, Analyst Downgrades Stock

Swati Sharma April 9, 2024 Bank Leave a comment

Mumbai, India – April 9, 2024 – Shares of Bandhan Bank took a tumble yesterday after the announcement that Managing Director and CEO Chandra Shekhar Ghosh would be stepping down by July 9, 2024. The news sent shockwaves through the market, with Bandhan’s share price plummeting over 9% on the National Stock Exchange (NSE).

Ghosh’s departure, just months before his tenure’s official renewal was due for approval by the Reserve Bank of India (RBI), has injected uncertainty into the bank’s future leadership. This uncertainty appears to be a key factor behind the sharp decline in share price.

Adding to the pressure, Jefferies, a prominent investment banking firm, downgraded Bandhan Bank’s stock to “Underperform” from a previous “Buy” recommendation. Jefferies also slashed its target price for the bank by a significant 41%, down to Rs. 170 from Rs. 290. This move reflects concerns about the bank’s growth prospects and potential for higher credit costs in the coming years.

Analysts point to the importance of a smooth succession plan, especially considering the recent onboarding of several new members to Bandhan Bank’s senior management team. The lack of a clear successor to Ghosh’s leadership role could lead to a period of transition and potentially hinder the bank’s growth trajectory.

While Ghosh is reportedly set to assume a broader strategic role within the Bandhan group, investors remain wary. The bank’s share price has already lagged the market over the past year, and this latest development adds to the existing anxieties.

Only time will tell how Bandhan Bank navigates this leadership change. The bank’s ability to find a strong successor and effectively manage the transition period will be crucial in regaining investor confidence and ensuring its continued growth.