Looking at the earnings season for the December quarter, it has been better for the banking sector. The sector has started showing great growth after recovering from the challenges of COVID 19. If there is an improvement in the asset quality of the banks, then the provisioning is under control.
Best Banking Stocks: Looking at the earnings season for the December quarter, it has been better for the banking sector. The sector has started showing great growth after recovering from the challenges of COVID 19. If there is an improvement in the asset quality of the banks, then the provisioning is under control. Loan growth is looking strong with disbursements reaching normal levels across all verticals. Deposits in banks are increasing. There has also been a good recovery from stressed assets. At present, after the results, there are many such stocks, whose outlook is looking strong. These also include Bank of Baroda, Indian Bank and Union Bank of India. After the results, the brokerage house has advised to invest in them. If you are also looking for better bank shares, then you can keep an eye on them.
Bank of Baroda
Brokerage house Emkay Global has a Nivea advice on Bank of Baroda. A target of Rs 145 has been given for the share. In terms of current price of Rs 115, there could be a profit of 26 per cent or Rs 30 per share. According to the brokerage, the PAT of BOB has been 2200 crores, while it was expected to be 1140 crores. This happened because of better NIMs and provision reversal. The GNPA ratio improved by 85bps to 7.3 per cent on a quarterly basis. Credit growth has been 4 per cent year-on-year and 5 per cent quarterly. It is expected that the RoE of BOB may improve to 9-12 per cent by FY22-24E from 1 per cent in FY21.
Union Bank of India
Brokerage house Motilal Oswal has given investment advice in Union Bank of India and has given a target of Rs 65 for the stock. In terms of current price of Rs 48, it can give 37 percent return. According to the brokerage, the bank has seen better growth in the December quarter due to loan growth and provision control. Strong loan growth was seen due to higher disbursement in the corporate and MSME sectors. Growth has also been stable in retail, agri. The asset quality of the bank has improved. There has also been a good recovery from stressed assets. Net NPA may come down to 2.2 per cent in FY23E. The credit cast for FY23/FY24 is expected to be 1.8%/1.6%. While RoA/RoE may remain at 0.8%/14% till FY24E.
Indian Bank
Brokerage house Emkay Global has given investment advice in Indian Bank and has set a target of Rs 220. In terms of current price of Rs 158, the stock can give a return of 39 to 40 percent or Rs 62 per share. Although the PAT of Indian Bank has been weaker than expected 690 crores. This has happened due to higher provisioning. The asset quality of the bank has been mixed. The GNPA ratio declined by 43bps to 9.1 per cent on a quarterly basis. Loan growth has been 3 per cent year-on-year. NIM has improved 14bps to 3 per cent on a quarterly basis. It is expected that going forward, Bank Basat can emerge as midcap PSBs.
(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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