Bank shares to buy: ICICI Bank, Axis Bank, HDFC Bank shares may increase up to 23%; check target prices
Large private banks, including ICICI Bank, HDFC Bank and Axis Bank, are expected to grow by up to 23% in the future, given their stance on a strong capital position.
JM Financial is bullish on India’s near-term banking sector with earnings growth expectations up 49% (year-on-year). Large private banks, including ICICI Bank, HDFC Bank and Axis Bank, are expected to grow by more than 22% in the future, given their stance on a strong capital position, steadily improving liabilities and their ability to invest in technology. These banks are well positioned to face stiff competition from retail lending and are better positioned for a potential increase in demand for credit. It comes after the State Bank of India (SBI), ICICI Bank and HDFC Bank continue to be identified as too big to fail, in the list of National Systemically Important Banks (D-SIB) of the Reserve Bank of India.
CMP: Rs 730, target price: Rs 950, rating: BUY
For the Q2FY22 quarter, Axis Bank reported total consolidated income of Rs 20,966.6 crore, up 3.36% from the previous quarter and net profit after tax of Rs 3,387.7 crore. The private lender is expected to post loan growth of 11% and deposit growth of 17% (year-on-year) for the quarter ended Dec.31, 2021. Axis Bank shares could rebound more than 23% to hit the target price of Rs 950. While the promoters held 11.64 per cent of the company’s capital, the FIIs held 54.53 percent, the DII 22.17 percent.
CMP: Rs 1,539, target price: Rs 1,950, rating: BUY
HDFC Bank underperformed in 2021, as the stock rose just over 9% in the past 12 months, compared to a 26% gain seen in the Nifty50. However, 2022 may be a year of return for HDFC Bank, as the stock is expected to rise more than 21% to hit the target price of Rs 1,950. The risk / reward ratio is attractive for the private sector lender who has sold. distressed retail loans worth Rs 2,188 crore to asset reconstruction companies (ARCs) over the past three quarters.
CMP: 785 Rs, target price: 1010 Rs, rating: BUY
ICICI Bank is expected to report loan growth of 15% and deposit growth of 17.5% for the quarter ended December 31, 2021. The company reported 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 September 30, 2021. Going forward, ICICI Bank shares could rebound by more than 22% to achieve the target price of Rs 1,010.
CMP: 491 Rs, target price: 615 Rs, rating: BUY
For the quarter ended September 30, 2021, the company reported total consolidated income of Rs 1,011,143.2 crore, up 8.44% from the previous quarter, and after-tax net profit of 8,889. Rs 8 crore. The public sector lender, which currently has a market cap of Rs 4,38,510.7 crore), is expected to report 6.3% loan growth and 8.8% deposit growth for the quarter ended December 31. Going forward, SBI shares are expected to recover. 20% to reach the target price of Rs 615.
The big banks to manage the pressures on the margins
At the same time, overall loan growth is expected to be 9% year-on-year for the quarter ended December 31, driven by a sequential recovery in the retail and SME segments, while business credit growth is expected to be slow, the investment bank 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 are expected to start to moderate for large banks while smaller players are expected to still see high credit costs, especially in the SME and microfinance segments.