2 Bank Stocks To Buy Next Week For Good Returns In 1 Year

Motilal Oswal, a domestic brokerage and research company, has issued a buy call on AU Small Finance Bank's stock, with a target price of INR1,550. On the NSE, the stock has gained 11.39 percent in five days and is up 11.89 percent year to date (YTD). ICICI Securities, on the other hand, has a buy call on HDFC Bank with a target price of Rs1,955. The stock has gained 5.84 percent in the last five days but has lost -8.68 percent in 1 year.

Buy AUBANK for a target price of INR1,550

"AUBANK has divided its business into 10 SBUs, where each SBU will have its own structure/growth strategy underpinned by shared verticals and support functions. In today's session, the bank dwelled upon its two critical SBU's - Wheels and Home loans. The bank has been working on scaling up its digital banking across product range, which is aiding sustainable growth," the brokerage has noted.

As per Motilal Oswal "AUBANK has been reporting a strong operating performance and robust business growth while asset quality has been particularly resilient amid a challenging economic environment. With an improvement in economic activity (as reflected by key economic indicators - GST collections, GDP growth, and PMI), the bank appears on track to deliver superior growth while retail deposit mix continues to improve supporting the margin profile."

"Collection efficiency stands healthy at 106% and the bank carries contingent reserves of INR3b (75bp of loans), which provides further comfort. We estimate AUBANK to deliver ~35% earnings CAGR over FY22-24, while RoA/RoE improves to 2.1%/20.4% in FY24E. We maintain our BUY rating with a TP of INR1,550 (premised on 4.5x FY24E BV), implying 33% potential upside," Motilal Oswal noted.

Buy HDFC Bank for a target price of Rs 1,955

According to ICICI Securities "Geopolitical situation creates macro uncertainties/volatility, but there is no direct impact on the bank's portfolio and it is continuously assessing the situation. Retail loan growth is at an inflection point and will scale up hereon while momentum will sustain in commercial lending. Strategic and execution focus to effectively implement project Future Ready will start yielding results. Tightened credit architecture will aid medium-term credit cost to settle lower than recent averages. Cumulative creditrelated contingency + floating buffer of 80bps not only makes the bank more resilient for any uncertainties, but also aids in experimenting with some newer products, newer geographies and newer customer profiles."

"Interaction with senior management of HDFC Bank suggests the bank is well geared to sustain high-teen growth in loans and advances. Visibility continues to be high on its consistent earnings delivery and >2% RoA / >18% RoE for FY23E/FY24E. Nonetheless, the stock has corrected >10% in past one year and underperformed Nifty by ~20% and Bank Nifty by ~7%. It currently trades at

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal & ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.