Top Picks! ICICI Direct Initiates Buy On 2 Large Cap Banking Stocks, Sees Gains Up To 23%

ICICI Direct initiates Buy on two banking stocks Axis Bank & State Bank of India (SBI) as Top Picks. The brokerage sees decent gains of up to 23% from the current level. Among these two stocks, Axis Bank has recommended a final dividend for the financial year 2022-23. Also, it fixes the record date for the recommended dividend.

1. Axis Bank

ICICI Direct has come with a Buy on the stock of Axis Bank with a Target Price of Rs. 1,100/share. If you buy the stock at the current market price, it can fetch up to 13% gains, considering the given target price.

The current market price of the stock is Rs. 974.80/share. The stock jumps 6.87% in 1 week, and 12.99% in 1 month, respectively. It has given 46.83% in the past 1 year. It has given 141.23% in the past 3 years. In the past 5 years, it gave 80.25% positive return.

Dividend

The Board of Directors of Axis Bank in their meeting held on April 27, 2023, recommended a final dividend of Re. 1/share of face value of Rs 2 each i.e. 50% for the financial year 2022-23.

"Recommended a final dividend of Re.1/- per equity share of face value of Rs. 2/- each (50%) for the financial year ended March 31, 2023, subject to approval of the members of the Bank at the ensuing 29th Annual General Meeting ("AGM"). The dividend, if approved by the members, will be paid on or after five days from the date of conclusion of the ensuing AGM. The AGM date and book closure date for the purpose of the payment of final dividend will be announced in due course," Axis Bank said in an exchange filing.

Record Date

The Board of Directors in their meeting held on May 30, 2023, fixes the record date as July 28 2023, for the final dividend.

"This is to inform you that the Board of Directors of the Bonk (the Board) at its meeting held today i.e. Tuesday, May 30, 2023, has approved convening 29th Annual General Meeting of the members of the Bank on Friday, July 28, 2023 at 10:00 A.M., through Video Conference/ Other Audio Visual Means," the Board of directors said in an exchange filing.

It added, "We wish to further inform you that pursuant to Regulation 42 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Friday, July 7, 2023 has been fixed as the record date to determine the members who will be eligible for final dividend, if approved by the members at the ensuing 29th Annual General Meeting."

2. State Bank Of India (SBI)

The brokerage firm initiates Buy on SBI with a Target Price of Rs. 725/share. Given the target price and the current market price of the stock, the stock is likely to give a decent return of up to 23%.

The current market price of SBI is Rs. 589.25/share on NSE. The stock jumped 1.6% in the past 1 week, and 2.19% in the past 1 month, respectively. It gave 27.13% positive return in 1 year. In 3 years, it gave 213.68% robust return. In 5 years, it gave 118.47% positive return.

Robust Q4FY23; PSU lenders report record earnings...

According to ICICI Direct, The banking industry witnessed its best performance in FY23 led by robust credit offtake, strong margins and lower credit cost (driven by improvement in asset quality). Private sector banks continued to deliver a robust performance with 25.8% YoY growth in earnings while PSU banks reported 42.1% YoY growth in earnings driven by improvement in NIMs as well as moderation in provisioning, which has been impacting their performance in previous fiscals.

It added, As per management commentaries, momentum in credit growth is expected to remain buoyant. We expect the same to be in the range of 12-14% YoY for FY24E. Repricing of liabilities at faster rate is expected to put pressure on margins though repricing of MCLR loans provide some cushion to lenders. Opex is expected to remain elevated as banks continue to focus on building distribution capabilities while provision is seen to remain benign. Overall, we expect earnings to improve in FY24E, albeit at a slower pace as compared to FY23. Thus, sustainable credit growth coupled with healthy return ratios is expected to drive valuation, though we remain selective on stocks.

Disclaimer - The stocks have been picked from the brokerage reports of ICICI Direct. Greynium Information Technologies, 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.