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New Delhi. Indian banking sector can give strong returns in the next three years. Financial services company JP Morgan says liquidity is stable, corporate balance sheets are strong and visibility of earnings growth is the best it has been in many years. In such an environment, the brokerage has given overweight rating on 7 bank shares and has shown more than 26 percent upside in some.
1. Punjab National Bank
PNB has got a target of Rs 136 with 11.3 percent upside potential. The report says that the bank’s books are now much cleaner than before and the return metrics are gradually improving.
2. Bank of Baroda
Bank of Baroda has got a target of Rs 340 and about 18.6 percent upside is shown. Continuously improving asset quality and growth of mortgage portfolio are cited as its major positives.
3. ICICI Bank
ICICI Bank has got a target of Rs 1650 and about 20.1 percent upside is possible. The bank’s strong deposit franchise and risk-based growth model are considered its biggest strengths.
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4. State Bank of India
SBI has got a target of Rs 1170 and 20.9 percent upside is possible. The report says that SBI has continuously increased its market share over the last several years and its earnings power remains very strong.
5. IDFC First Bank
IDFC First has been given a target of Rs 100 and there is a scope of about 24.3 percent upside. Fall in credit costs, improving earnings visibility and strong deposit traction have brought it into the overweight category.
6. AU Small Finance Bank
AU Bank has got a target of Rs 1126 and it is the stock with the highest upside of 26.4 percent. Its retail growth, low credit costs and strong profitability keep it among the brokerage’s top picks.
7. Kotak Mahindra Bank
Kotak has been given a target of Rs 2625 and an upside of 26.2 percent is expected. JPMorgan says that Kotak’s earnings growth is the strongest among big private banks and the balance sheet is very clean.
JPMorgan, a bank with neutral rating, has considered four banks as neutral. Brokerage says that there is stability in these banks but the upside seems limited. Considering their valuation and growth outlook, a hold stance has been placed on them. The names of the banks which have been given neutral rating are as follows – HDFC Bank, Axis Bank, Federal Bank and Bandhan Bank. (Disclaimer: The stocks mentioned here are only for informational purposes. If you want to invest money in any of these, then consult the date first. StuffUnknownwill not be responsible for any profit or loss of yours.)
