7 Banking Stocks To Buy As Suggested By Motilal Oswal For Up To 30% Gains

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	Target price
Rs 123	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	Target price
Rs 84	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	Target price
Rs 140	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	Target price
Rs 192	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	Target price
Rs 1226	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	Target price
Rs 780	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.

Bank of Baroda

Current market price	Target price
Rs 84	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.

Disclaimer

The above 7 stocks to buy are picked from the India Strategy report of Motilal Oswal Financial Services. Please note investing in stocks is subject to market risks and one needs to be cautious at this point of time as markets have gone-up sharply. Neither the author, nor Greynium Information technologies Pvt Ltd would be responsible for losses incurred based on a decision made from this article.