Buy 2 Mid-Cap & 2 Small-Cap Banking Stocks For Gains Up To 80%, Recommended By Brokerage

 

DCB Bank

DCB Bank Ltd. was founded in 1995 and is a private sector bank with a market cap of Rs 2332.32 Crore. It is a small-cap stock. 

Axis Securities in its report published on 21st June 2022 has given a but call on DCB Bank for a target price of Rs 115/share. DCB Bank Ltd's current market price (CMP) is Rs 74.75. Considering the estimated target price and the CMP of the stock, the stock sees potential gains of 54%. According to the brokerage, the price of DCB Bank Ltd. can achieve the estimated target price of Rs 115/share in 1 year. 

Axis Securities Views on DCB Bank

Despite operating primarily in the self-employed segment, DCB has been able to manage the asset quality stress fairly well. The collections have held up well and with the trend likely to sustain, the secured nature of the bank's restructured book hints at credit costs moderating going forward. The positive trends in terms of a strong recovery pipeline and moderation in slippages will aid in asset quality improvement. With asset quality stress and credit costs having peaked out, the balance sheet growth and improving return ratios should drive valuations for DCB. At 0.5x FY24E ABV, valuations are undemanding. We retain our estimates and maintain our BUY recommendation on the stock with a target price of Rs 115/share, implying an upside of 54% from the CMP. 

Bandhan Bank

Bandhan Bank Ltd., incorporated in the year 2014, is a mid-cap banking company with a market cap of Rs 45,512 crore. 

In a report published on 18th June 2022, Axis Securities suggested buying Bandhan Bank stocks with a target price of Rs 343. Bandhan Bank Ltd. is currently trading for Rs 283.75/share on the NSE. According to the brokerage's Target Price & the stock's CMP, the stock could gain 21%. The brokerage's suggested time frame for Bandhan Bank Ltd.'s price to reach the specified target is 12 Months.

Axis Securities Views on Bandhan Bank

The improvement in collection trends especially in the key states of Assam and West Bengal along with a reduction in overall stressed assets is encouraging. The diversification of the portfolio by reducing the share of the group EEB loans will lend higher stability to the overall book. The bank remains well-capitalized to fuel its medium-term growth. Recommendation: We recommend a BUY rating on the stock with a target price of Rs 343/share, implying an upside of 10% from the CMP 

CSB Bank

CSB is a private sector lender, headquartered in Thrissur, Kerala. Currently, the bank has 609 branches and 468 ATMs spread across 18 states and two union territories. It is a small-cap banking stock with a market cap of Rs 3,255 Crore. 

The report was published on 16th June 2022, with a target price of Rs 270, Edelweiss Research has a buy call on CSB Bank. CSB Bank Ltd. is currently trading for Rs. 189.65/share on the NSE. According to the estimated target price by the brokerage and the CMP of the stock, the stock could gain nearly 80% in 12 months. 

Edelweiss Research Views on CSB Bank 

At the Current Market Price (CMP), the stock is trading at 0.9x FY24E ABV. The bank has industry-leading margins, strong return ratios and robust asset quality. With anticipated credit growth of nearly 20% during FY22-24E, we expect a rerating. As such, we maintain our 'BUY' recommendation with a Target Price of Rs 340/share, implying an 89% upside. 

AU Small Finance Bank

AU Small Finance Bank Limited is a small finance bank with presence a across the country. It is a mid-cap stock with a market capitalisation of Rs 37,883 crore. 

Sharekhan is positive on AU Small Finance Bank and in its research report dated June 20, 2022, recommended a buy rating on the stock with a target price of Rs 810. The current market price (CMP) of the stock on NSE is Rs 601.50/share. According to the broker's given target price and the CMP of the stock, the shares of the bank could gain nearly 35%.

Sharekhan Views on AU Small Finance Bank

The stock is currently trading at 4.5x and 3.8x its FY2023E and FY2024E ABV, respectively. Factors such as AU SFB's long history, seasoned loan book, and superior underwriting practices are likely to support its asset quality and superior return ratios (ROA: -1.7- 2.0%; ROE: 16-18%). There is a long runway for sustainable earnings compounding ahead. Higher provision coverage and contingent buffers provide cushion for any future risk. The bank is on track to become a full-scale universal retail-focused bank adding to its products and features. We maintain our Buy rating on the stock with an unchanged price target of Rs. 810. We believe growth momentum would surprise on the upside, led by strong AUM growth and lower credit cost.

Bank, CMP, Target Price & the Potential Gains