The outlook for the banking sector is good. In the recent corporate earnings season, there has been an improvement in the earnings of banks.
Best Banking Stocks to Buy: The Nifty Bank Index has declined significantly from its 1-year high. It broke from the 1-year high level of 41,830 and closed at the level of 33,135 on Thursday. However, the outlook for the banking sector is better. In the recent corporate earnings season, there has been an improvement in the earnings of banks. The sector’s asset quality has improved, credit growth has improved, while cost control has also been visible. Due to all this, business growth was better. If you are also looking for a better stock from the sector, then you can keep an eye on the country’s largest public sector bank SBI and private sector giant HDFC Bank. Brokerage houses are bullish on these 2 stocks. In these, further returns of 49 to 50 percent are expected.
While recommending investment in HDFC Bank, brokerage house ICICI Security has given a target of Rs 1955. In terms of current price Rs 1330, it can give 47 percent return. The brokerage says that the theme of HDFC Bank’s annual report is once again Leading Responsibility. Which is a focus on reimagining with technology and service culture first. CEO (Shashidhar Jagadishan)’s message last month focused on several reasons why this is an opportune time to implement the merger with HDFC.
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The annual report said that the growth of the bank is in the right direction, the target is to double the branch in the next 3 to 5 years, with a plan to open 1500 to 2000 new branches every year. The bank will continue to invest in modern technology and talent. There is not expected to be a need to raise more funds to meet the reserve requirement.
Brokerage house CLSA has given ‘BUY’ advice in SBI and has fixed a target price of Rs.615. This is 36 per cent higher than the current price of Rs 450. The brokerage house says that the bank’s business growth, margins and asset quality are in the right direction. Credit growth looks better than expected. The margin of the bank is likely to be better. The best part is that after the recent fall, the valuation of the stock has also become very attractive.
On the other hand, brokerage house ICICI Security has given a target of Rs 673 while advising investment in SBI. With this current price of Rs 450, 49 to 50 percent return is possible in this. According to the brokerage, the gross NPA of SBI has come down to the low of the last 1 decade. The credit cost has come down to 55bps and margins are showing good growth. Asset quality has improved due to credit cost control. Credit growth in FY23E/FY24E is expected to be between 13 per cent and 15 per cent. The Bank’s RoE stood at 13.9% and RoA at 0.67%. There is growth in every segment like retail, corporate, home loan, vehicle loan.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)