Overall banking sector results have been better than expected. The outlook for the banking sector is good mainly due to improvement in asset quality, credit growth, lower loan loss provisions.
Best Banking Stocks to Buy: Looking at the results of March quarter of FY 2022, there have been positive signs from the banking sector. Overall banking sector results have been better than expected. Banks produced better results mainly due to improvement in asset quality, credit growth, lower loan loss provisions. After the results, brokerage house Emkay Global is positive about the banking sector. The brokerage says that the growth momentum and margin growth in the banking sector is expected to continue. Rate every cycle can prove to be a key factor for the sector going forward. With the improvement in macro conditions, the sector will get more support.
who performed how
The brokerage says that if we talk about the outlook, then ICICI Bank can prove to be the winner. Whereas Kotak Bank has also had strong earnings due to reduction in provisions. HDFCB has shown strong growth, but margins and fee performance have been weaker than expected. The results of Axis Bank have been as per the estimates. The results of IndusInd Bank also remained as per the estimates, but the market expects more than this. According to estimates, the results of Federal Bank have been better than the estimates of KVB. Bandhan Bank has done better than expected in terms of PAT. SBI has also shown better earnings than expected.
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Rapid improvement in asset quality
Brokerage house Emkay Global says that the post Kovid 19 recovery in the banking sector has been better. In particular, the asset quality of the entire sector has improved rapidly. The higher share of the floating rate book and passing on the effect of rate hike to the customers will increase the profits and RoEs of the banks. The brokerage house says that the outlook for the banking sector is strong, while in the recent correction, many stocks have come at attractive valuations. In such a situation, there is a good opportunity to add quality stocks to the portfolio. The brokerage house has included ICICI Bank and SBI in its top picks in largecap stocks. At the same time, City Union Bank, Karur Vysya Bank and Indian Bank have been chosen in Midcap and Smallcap.
On the other hand, IndusInd Bank looks attractive in the mid-cap space, given the lower valuations and better growth/RoE prospects. HDFC Bank looks attractive from a valuation perspective, but sub-par core profitability and merger overhang are a matter of concern in the near future. While upgrading Bandhan Bank has given a hold rating from the sale.
Bank Stocks: Advice and Targets
Axis Bank: Buy, Rs 1020
HDFC Bank: Buy, Rs 1800
ICICI Bank: Buy, Rs 1025
INDUSIND Bank: Buy, Rs 1350
KOTAK Bank: Buy, Rs 2180
SBI: Buy, Rs 640
BOB: Buy, Rs 130
PNB: Sell, Rs
City Union Bank: Buy, Rs 180
DCB: Sell, Rs
Federal Bank: Buy, Rs 125
KVB: Buy, Rs 72
RBL: Buy, Rs 140
BANDHAN Bank: Hold, Rs
(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.)
