Motilal Oswal Picks Top 3 Stocks From Banking Sector, Sees 29% Upside Potential, Buy

1. Stock To Buy: IndusInd Bank

Motilal Oswal has assigned buy call to the banking stock with a target price of Rs 1450 apiece and a potential return of 29%. The current market price of the stock is Rs 1128 apiece with an intraday decline of 1.52%. The stock's 52-week high is Rs 1275 apiece and 52-week low is Rs 763 apiece, respectively.

The company has a market capitalisation of Rs 87,470 crore. The shares have given maximum return of 12% in last 1-year and 2% in last 3-months. It has declined 30% in last 5-years. The banking company came into existence in 1994.

According to Motilal Oswal, "IndusInd Bank's operating performance remains on track led by healthy NII growth and controlled provisions. Asset quality ratios improved driven by lower slippages in corporate as well as consumer portfolios. Thus, outlook for credit cost remains controlled. The management is guiding for continued momentum in loan growth and is looking to end FY23 with a growth of 20%. Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 1.0% of loans will enable a steep decline in credit cost, thus driving a sharp recovery in earnings. We estimate PAT to report 40% CAGR over FY22-24, leading to 16% RoE in FY24E. We maintain our BUY rating with a target price of Rs 1,450 (premised on 1.8x FY24E ABV)."

Stock To Buy: State Bank of India

The current market price of SBI is Rs 602 apiece with an intraday gain of 0.58%. The 52-week high of SBI is Rs 622 apiece and 52-week low is Rs 425 apiece, respectively. Motilal Oswal has assigned a target price of Rs 700 implying an upside of 16%.

The PSU stock has a market capitalisation of Rs5,37,841.73 crore. The stock has given a return of 78% in last 5-years, 85% in last 3-years, and 20% in last 1-year. In last 3-month, it has jumped 13% and 7% in last 1-month.

According to Motilal Oswal, "High mix of floating loans, which will benefit from loan re-pricing, will continue to support the NII and overall earnings even as deposit cost could see some increase. Asset quality performance was strong with continuous improvements in slippages and headline asset quality ratios with restructured book being under control at 0.9%. We estimate earnings to post 32% CAGR over FY22-24 and project SBIN to deliver an FY24 RoA/RoE of 1.0%/ 17.3%, respectively. We revise our TP to INR700 (based on 1.4x FY24E ABV + INR192 from subsidiaries). SBIN remains one of our preferred picks in the sector."

Stock To Buy: ICICI Bank

The current market price of the multibagger stock is Rs 920 apiece with an intraday surge of 0.13%. The stock's 52-week high is Rs 942 apiece and 52-week low is Rs 642 apiece, respectively. The company has a market capitalisation of Rs 6,41,898.91 crore.

The stock has given a return of 183% in last 5-years, 84% in last 3-years, and 21% in last 1-year. It came into existence in 1994. The analyst has given buy call to ICICI Bank stock with a target price of Rs 1100 apiece. Buy ICICI Bank now to get an upside of 20%.

According to Motilal Oswal, "The bank is emerging as a new growth leader in the SME and Retail segments, aided by continued investments in technology and partnerships with new ecosystem players. We expect a 20% loan CAGR over FY22-24 for the bank."

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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 check with certified experts before taking any investment decision.