CLSA Cuts Target Price For Banks By Up to 70%

In the wake of the pandemic, the global firm CLSA has cut its target price on banks due to risk on asset quality which is likely to worsen.

Even though RBI in its recent measures announced on Friday has provided incentive for extending credit by reducing reverse repo cut by 25 basis points.

CLSA Cuts Target Price For Banks By Up to 70%

For Indian banks, the target price by the global brokerage firm has been declined by any way between 20-70%. "The unprecedented disruption caused by Covid-19 and a 40-day national lockdown have put brakes on an already struggling credit environment. Our interactions with banks indicate that normalcy could be restored in two to three quarters depending on the severity of the disruption," said CLSA.

As per CLSA, the worst woes shall be from the MSME sector, also the distress shall be seen from the unsecured credit amid lay-offs and pay-cuts being announced due to Covid 19.

Also, credit off take will go do as many of the PSU banks are currently in the process of completing their merger procedure.

Bank	Rating	Previous Target price	New Target Price
Axis Bank	Buy	900	595
Bank of Baroda	Buy	125	70
Bank of India	-	60	30
Canara Bank	Sell	190	80
HDFC Bank	Sell	1380	1100
ICICI Bank	Buy	580	460
IndusInd Bank	Buy	1950	595
Kotak Mahindra	Buy	1960	1425
PNB	Sell	60	22
SBI	Buy	390	240
UBI	Buy	80	40

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