From Kotak Mahindra Bank to Paytm: Motilal Oswal Backs These 5 Bank, NBFC Stocks Amid Market Volatility

Volatility in the Indian stock market today has kept the investors on edge; many are looking for green shoots on Nifty and Sensex. While sectors like IT, pharma, and steel opened in red, banking sector stocks held the fort. Nifty Bank and Nifty Financials were among the few exceptions that opened in the green today. Amid positive upside in banking stocks, Motilal Oswal on Thursday has weighed on five banking and NBFC stocks for long-term growth.

One 97 Comm (Paytm), Kotak Mahindra Bank, Cholamandalam Inv. & Fin, Poonawala Fincorp, PNB Housing Finance, are the top banking and NBFC stocks which may see an upside of 10-15% in twelve months, said Motilal Oswal in its report.

Bank and NBFC Shine Amid Stock Market Volatility

Nifty Bank has surged nearly 9.85% in last thirty days, whereas, Nifty Financials have surged nearly 8.34% in one month. On Thursday, both the indices were in green since morning and regained momentum later in the day as Nifty and Sensex recovered from their opening trade losses. ICICI Bank, Canara Bank, HDFC Bank, Axis Bank, IndusInd Bank, etc emerged as the top stocks which are making decent gains today.

Why Bank Stocks May Outperform in the Coming Months?

Due to robust balance sheets and the ability to navigate macroeconomic uncertainties, banking sector companies are well-positioned to outperform in the coming months, noted Motilal Oswal in its report. The Reserve Bank of India's repo rate cuts, followed by the easing of the regulatory stance, are likely to drive NBFCs' growth in the upcoming quarters.

Top Bank Stocks With 10-15% Upside in Long Term

According to stock brokerage firm Motilal Oswal, Cholamandalam One 97 Comm (Paytm), Kotak Mahindra Bank, Poonawala Fincorp, and PNB Housing Finance may see an upside of 10-15% in the longer duration of 12 months.

Kotak Mahindra Bank

In the past one year, Kotak Mahindra bank stock has showcased a robust performance with steady growth and profitability. Motilal Oswal has expressed optimism over its business growth and underlying profitability as the RBI has lifted significant regulatory restrictions imposed on the bank.

Paytm

Paytm, also known as One97 Communication has continued to remain a strong merchant base despite fiasco related to its merchant bank system. The fintech has also scaled its loan distribution busines and has witnessed a strong 85% GMV from merchants, underlined the brokerage indicating a 24% GMV CAGR over FY25-27E .

Poonawala Fincorp

Considering its plans to expand with 400 new branches in the new financial year and adding new products for customers to become a multi-product lender, Motilal Oswal highlighted that the company scrip may see a 10-15% upside in 12 months.

PNB Housing Finance

Motilal Oswal in its report mentioned that PNB Housing finance is confident of scaling its retail loan book to Rs 1 trillion by financial year 2027. The financial institution will achieve the target by sustained mortgage demand and revival of PM Awas Yojana. Its NIM are also expected to improve to 4% by next financial year due to better product mix and focus on retail expansion and affordable housing.

Cholamandalam Investment & Finance

The diversified portfolio of Cholamandalam Investment & Finance and its focus on NIM expansion are likely to support its growth and healthy AUM CAGR of 24% over FY24-27E. With the possibility of further repo rate cut its management anticipates its NIM expansion in the coming months, noted Motilal Oswal.

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