Bank stocks to buy: ICICI Bank, Axis Bank, HDFC Bank shares may rally up to 23%; check target prices

Larger private banks including ICICI Bank, HDFC Bank and Axis Bank stocks are likely to rally up to 23% going forward, given their position on strong capital situation.

SBI, HDFC Bank, ICICI bank, Axis
For the quarter ended 30 September 2021, the company reported a consolidated total income of Rs 1,01,143.2 crore, up 8.44 % from last quarter, and net profit after tax of Rs 8,889.8 crore. The public sector lender, which currently has a market cap of Rs 4,38,510.7 crore), is expected to report loan growth of 6.3% and deposits growth of 8.8% for quarter ended December 31. Going forward, SBI shares are expected to rally over 20% to reach target price of Rs 615 (file photo REUTERS)

JM Financial is bullish on the Indian banking sector in near term with expectations of earnings growth rising 49% (YoY). Larger private banks including ICICI Bank, HDFC Bank and Axis Bank stocks are likely to rally over 22% going forward, given their position on strong capital situation, consistent improvement in liabilities and ability to invest in technology. These banks are well placed to ride the intense competition in retail lending, and are better positioned for a potential uptick in credit demand. This comes after State Bank of India (SBI), ICICI Bank and HDFC Bank continue to be identified as banks that are too big to fail, in Reserve Bank of India’s list of Domestic Systemically Important Banks (D-SIBs).

Axis Bank
CMP: Rs 730, Target Price: Rs 950, Rating: BUY

For the quarter Q2FY22, Axis Bank reported a Consolidated total income of Rs 20,966.6 crore, up 3.36 % from last quarter and net profit after tax of Rs 3,387.7 crore. The private lender is likely to report 11% loan growth and 17% deposits growth (YoY) for quarter the quarter ended 31 December 2021. Axis Bank stock may rally over 23% to reach the target price of Rs 950. While promoters held 11.64 per cent stake in the company, FIIs owned 54.53 per cent, DIIs 22.17 per cent.

HDFC Bank
CMP: Rs 1539, Target Price: Rs 1950, Rating: BUY

HDFC Bank has underperformed in 2021 with the stock rising little over 9 per cent in past 12 months compared to 26 per cent gain seen in the Nifty50. However, 2022 can be a comeback year for HDFC Bank as the stock is expected to rally over 21% to reach the target price of Rs 1,950. The risk-to-reward ratio is attractive for the private sector lender which sold distressed retail loans worth Rs 2,188 crore to asset reconstruction companies (ARCs) in the last three quarters.

ICICI Bank
CMP: Rs 785, Target Price: Rs 1010, Rating: BUY

ICICI Bank is expected to report loan growth of 15% and deposits growth of 17.5% for the quarter ended 31 December 2021. The company reported a consolidated total income of Rs 39,484.4 crore, up 1.63 % from last quarter, and net profit after tax of Rs 7,049.3 crore for the quarter ended 30 September 2021. Going forward, ICICI Bank stock may rally over 22% to reach target price of Rs 1,010.

SBI
CMP: Rs 491, Target Price: Rs 615, Rating: BUY

For the quarter ended 30 September 2021, the company reported a consolidated total income of Rs 1,01,143.2 crore, up 8.44 % from last quarter, and net profit after tax of Rs 8,889.8 crore. The public sector lender, which currently has a market cap of Rs 4,38,510.7 crore), is expected to report loan growth of 6.3% and deposits growth of 8.8% for quarter ended December 31. Going forward, SBI shares are expected to rally over 20% to reach target price of Rs 615.

Larger banks to navigate margin pressures

Meanwhile, overall loan growth is expected to be 9% YoY for the quarter ended 31 December led by sequential pickup in retail and SME segments, while corporate credit growth is likely to be sluggish, the investment banking firm said in its report. Operating expenses, which were high in the second quarter, are expected to continue a similar trend given continued investments in technology, sourcing and collections by most players. Credit costs should begin moderation for larger banks while smaller players are expected to yet see elevated credit costs, especially in SME and microfinance segments.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express Telegram Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.