3 Reputed Bank Stock Recommendations From Axis Securities

Axis Securities has picked three bank stocks which investors can buy, as the analyst sees growth potential of upto 43%. Axis securities did a coverage report on various sectors including the BFSI, that's when it valued bank stocks and recommended SBI Bank, ICICI Bank, and Federal Bank. Here are the details.

According to the Axis Securities report, FY23 appears promising for the BFSI sector. Most of the Banks/NBFCs are well-placed to capitalize on growth opportunities. "Outlook on the asset-quality front remains encouraging with the expectations of slippages moderating and recoveries remaining healthy, thereby supporting the asset quality improvement across the sector. We believe the growth momentum is likely to remain healthy as pick-up visible in the Retail and SME lending seems sustainable. Moreover, corporate loans have also shown sharp improvement."

The brokerage is overveight on the sector " We believe with the asset quality pain being largely behind(barring certain segments) and the restructured book behaving fairly well, a ramp-up in credit growth and the ability to maintain margins in an increasing interest rate environment is likely to drive valuations for Banks/NBFCs moving forward. Hence we maintain an overweight stance on the sector. Banking stocks which was led by improving credit growth, asset quality trends, and return ratios. This is expected to lead to the rerating in Banks' valuation multiples."

Buy stock of SBI Bank, with a target price of Rs 750 per share
The brokerage believes that the share price of SBI Bank, will rise by 43% to Rs 750 per share as a target price. " Among PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalization, strong liability franchise, and improved asset quality outlook. We believe normalization in credit costs and improved growth outlook should lead to double-digit ROEs of ~16.5% over FY23-25E. We maintain our BUY rating on the stock with a target price of Rs 750/share (core book at 1.4x FY24E and subsidiaries at
Rs 190)

Buy stock of ICICI Bank, with a target price of Rs 1150 per share
Axis Securities feels that buying shares of ICICI Bank will fetch investors potential gains of upto 35% "The bank has been outperforming its peers and has been firing on all cylinders. ICICIB has ticked most boxes on growth, margins, and asset quality. Higher loan growth, improving operating profits, and a strong provision buffer coupled with a strong deposit franchise will help the bank achieve ROAE/ROAA expansion over FY23-25E. On the valuation front, we believe the bank continues to be on a comfortable footing. We maintain a BUY on the stock with a target price of Rs 1,150/share (SOTP basis core book at 3x Sep'24E and Rs 175 Subsidiary value)."

Buy stock of Federal Bank, with a target price of Rs 170 per share
Axis Securities believes shares of Federal Bank will potentially rise by upto 32% "The bank has been outperforming its peers and has been firing on all cylinders. ICICIB has ticked most boxes on growth, margins, and asset quality. Higher loan growth, improving operating profits, and a strong provision buffer coupled with a strong deposit franchise will help the bank achieve ROAE/ROAA expansion over FY23-25E. On the valuation front, we believe the bank continues to be on a comfortable footing. We maintain a BUY on the stock with a target price of Rs 1,150/share (SOTP basis core book at 3x Sep'24E and Rs 175 Subsidiary value)."

Disclaimer:
The stock has been picked from the brokerage report of Axis Securities, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.