2 Banking Stocks To Hold, Buy As Shares Can Rally 30-37%, Recommended By Top Broking Firms

Leading broking firms Motilal Oswal & Sharekhan has picked two private sector banks namely IndusInd Bank (IIB) and City Union Bank (CUB) with a "Buy" and "Hold" tag. The broking firms see a robust upside in the share prices of the stocks up to 37% if they are purchased at the current market price. Check below to know more:

1. IndusInd Bank (IIB)

Stock Performance, Potential Returns, Target Price, & Market Cap

Motilal Oswal has placed a "Buy" on the stock of IIB with Rs 1,450/share target price. It is likely to give a robust return of 37% if purchased at the current market price, considering the given target price. The stock is currently trading at Rs 1,064.70/share. It is a large-cap private sector bank having a market capitalisation of Rs 82,775.56 crore.

The stock has fallen 4.86% in the past 1 week. Whereas it has fallen 7.84% in 1 month, and 14.92% in 3 months, respectively. However, it gained 17.47% in 1 year, and 32.65% in 3 years, respectively.It has fallen 38.49% in 5 years.

Motilal Oswal reiterate Buy with TP of Rs 1,450/share

According to Motilal Oswal, IIB's operating performance remains on track, led by healthy NII growth and controlled provisions. IIB is guiding for continued momentum in loan growth and is looking to deliver >20% growth in the medium term fueled by continued market share gains in its key domains, while also scaling up new business verticals. This is likely to aid margins. Asset quality remains steady driven by lower slippages while healthy provisioning in the MFI portfolio and contingent provisioning buffer of 0.8% of loans will enable a steep decline in credit costs, thus driving recovery in earnings. We estimate PAT to report 28% CAGR over FY23-25 leading to an 18% RoE in FY25. We reiterate BUY with a TP of INR1,450 (premised on 1.7x Sep'24E ABV).

2. City Union Bank (CUB)

Stock Performance, Potential Returns, Target Price, & Market Cap

Sharekhan Downgraded the rating on CUB to Hold with Rs 176/share target price. It sees a potential upside of up to 31% in the share price from its current level. The stock is currently trading at Rs 134.30/share. It is a mid cap private sector bank with a market capitalisation of Rs 9,910.12 crore.

The stock has fallen 5.27% in the past 1 week. It has fallen 2.35% in 1 month, and 33.6% in 3 months, respectively. However, it gained 12.05% in 1 year. It has fallen 30.85% in 3 years and 18.3% in 5 years, respectively.

Sharekhan Downgrade to Hold with a revised PT of Rs. 176/share

According to Sharekhan, At the CMP, CUB trades at 1.8x/1.6x/1.4x its FY2023E/FY2024E/FY2025 ABV, respectively. "Our downgrade factors in weak business outlook compared to peers despite strong sector tailwinds and recent lapses in internal controls. We believe credit cost is expected to remain higher due to subpar coverage on bad loans and slippages are expected to remain higher in FY2024E despite muted growth in the past two years and benign credit cycle. The restructured book is relatively higher than PSU banks also. Business momentum continues to remain below system growth. Key monitorable remains the RBI's approval on the reappointment of the existing MD and CEO (tenure ends in April 2023)," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage reports. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.