Motilal Oswal has a buy call on 7 banking stocks in its latest India Strategy report. According to the report, among the banking stocks include private sector, public sector and small finance banks. "We estimate public sector banks to report improved operating performance, supported by modest business growth and a gradual reduction in provisions," the brokerage has said.
Equitas Holdings
Current market price- Rs 123
Target price - Rs 160
The brokerage sees a near 30% upside on the stock of Equitas Holdings and believes that net interest margins would remain stable at around 8%. The brokerage says that it remains watchful of asset quality in MSME book; focus to remain on CE and restructuring book, it has noted.
Federal Bank: Buy the stock for a price target of Rs 110
Current market price - Rs 84
Target price - Rs 110
Federal Bank is another stock where the brokerage sees a near 30% upside from the current levels. Motilal Oswal believes that the Business growth for Federal Bank would remain modest, while asset quality will remain a monitorable.
Indian Bank: Buy the stock with a price target of Rs 175
Current market price - Rs 140
Target price - Rs 175
The brokerage sees a near 25% upside on the stock of Indian Bank from the current levels. Motilal Oswal believes that the loan growth will witness an uptick and the margins for the bank would remain stable around 3.1%.
RBL Bank
Current market price - Rs 192
Target price - Rs 235
The brokerage sees an upside of nearly 23% on the stock of RBL Bank and has a buy call on the stock. Motilal Oswal Financial Services believes that asset quality of the bank will remain under pressure on exposure to MFI / Credit Cards. Among the monitorables according to the brokerage would be Growth in deposits and liquidity positioning.
Buy AU Small Finance Bank stock
Current market price - Rs 1226
Target price - Rs 1400
According to the brokerage margins for the bank are likely to witness an increase to 5.7%, while CoF and C/I ratio are other key monitorables. It also feels that business growth will witness a healthy pick-up.
Axis Bank: Buy the stock with a price target of Rs 925
Current market price - Rs 780
Target price - Rs 925
According to Motilal Oswal, credit costs will remain elevated for Axis Bank, while slippage - a key monitorable to assess the impact on asset quality. The margins for the bank are expected to remain stable, while the brokerage expects business growth to pick-up.
Current market price - Rs 84
Target price - Rs 100
The brokerage sees an upside of at least 19% on the stock of Bank of Baroda from the current market price of Rs 84. Elevated credit costs are likely to keep earnings under pressure, while slippages to our expected to be under pressure, feels Motilal Oswal.
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