Experts are bullish on the banks and financial sector. Along with the economic recovery, the growth in this sector is expected to become stronger.
Best Banking Stocks to Buy: Experts are bullish on the banks and financial sector. He believes that the December quarter results indicate a strong recovery in the BFSI sector. There are some strong banks, whose profits have improved, asset class has improved, loan growth is visible and credit cost has come down. In such a situation, along with the economic recovery ahead, the growth in this sector is expected to become stronger. In the recent fall in the market, the valuation of some such stocks has become more attractive. Brokerage house Axis Securities has advised Nivea in shares of ICICI Bank and SBI with strong fundamentals from large cap segment. If you are also looking for some of the best stocks in your portfolio, then you can keep an eye on them.
ICICI Bank
CMP: Rs 715
Target: Rs 990
Return Estimation: 38%
The brokerage house says that ICICI Bank has outperformed as compared to Pierce. The bank’s performance across all indicators of growth has been excellent. Margins are good and the asset class has shown steady improvement. Loan growth is high, operating profit is also showing improvement. Strong buffer of provisions, strong growth in deposits will help the bank achieve ROAE/ROAA expansion for FY22-23E. Talking about the valuation, it looks comfortable. The brokerage house has given investment advice in the stock with a target of Rs 990. The current price of the stock is Rs 415, so it can give 38 percent return. However, retail asset quality and delay in resolution of stressed assets remain a concern.
negative returns this year
ICICI Bank has given a negative return of about 8 percent this year. At the same time, the stock has lost about 13 percent in the last 1 month. Talking about the last 1 year, investors have got a flat return of 12 percent in this. However, over a long period of 5 years, it has proved to be a multibagger and has given 181 percent returns.
SBI
CMP: Rs 470
Target: Rs 720
Return Estimation: 53%
The brokerage house believes that SBI’s unsecured lending profile is strong with over 90 per cent of the salaried government employees. Retail book traction remains healthy at 15 per cent. It is backed by Home Loans and Express Credit and is likely to improve further in the coming quarters. The market share of the bank in home loans and auto loans is more than 20 per cent. The Bank’s ROA is expected to return to the historical range of 0.7%-1%. There is a strong recovery in NPAs.
SBI continues to be the best player among PSU banks. It will get the most benefit of the gradual recovery in the Indian economy. The PCR of the bank is healthy, the capitalization is strong. Asset quality is also better. With the normalization of credit cost and improvement in operational performance, ROEs in FY22-24E are likely to be 15%. The brokerage house has advised investment in the stock and has set a target of Rs 720. In terms of current price of Rs 470, it can give 53 percent return. This stock has weakened 13 percent in 1 month.
(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.)
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