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Top Stock Picks: Bank, NBFC & HFC Stocks To Buy Ahead of Q4FY22E Results

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The brokerage firm HDFC Securities has given an eye on the banking space and has picked up Axis Bank for a target price of Rs 1,021, Bandhan Bank for a target price of Rs 406, City Union Bank for a target price of Rs 213, Federal Bank for a target price of Rs 126, ICICI Bank for a target price of Rs 1,001 as its top picks with a buy rating. Whereas, Cholamandalam Investment and Fin Co (CIFC) for a target price of Rs 774, CreditAccess Gr for a target price of Rs 994, and SBI Card with a target price of Rs 1,255 are the brokerage's top selections in the NBFC and HFC sector, with a buy rating ahead of Q4FY22E results.

 
Top Stock Picks: Bank, NBFC & HFC Stocks To Buy Ahead of Q4FY22E Results

The brokerage has said "We expect the HSIE coverage universe of 23 lenders to report yet another optically strong quarter, with earnings growth at +65% YoY (+11% QoQ), as provisioning run rate continues to normalise (130bps). Collections and recoveries have continued to be strong, with little incremental stress expected on account of the third wave."

According to the brokerage "With asset quality issues largely over, we believe that management commentary on loan growth outlook amidst rising inflation would be a key monitorable, although we expect our coverage universe to continue gaining market share (+100bps for banks during Q4FY22). We tweak our FY22E-FY24E forecasts for select lenders to factor in stronger loan growth and lower credit costs and roll forward to Mar-24."

HDFC Securities has claimed "We continue to prefer large banks with strong balance sheets and formidable deposit franchises - ICICIBC (TP INR1,001) is our conviction pick among large banks. Given the steep 14% and 37% run-up respectively in CIFC and CREDAG since our last publication, we move SBICARD (TP INR1,255) to the top of our NBFC conviction list."

HDFC Securities has also highlighted that "We continue to prefer large banks with strong balance sheets and formidable deposit franchises that are likely to continue to gain market share on both sides of the balance sheet with ICICIBC (TP INR1,001) being our top pick. Among NBFCs, SBICARD (TP INR1,255) is our top pick, with strong visibility of growth and profitability as we believe the concerns on MDR are overdone."

 
BanksRecommendationTarget Price in Rs
AU Small Finance BankREDUCE1,264
Axis BankBUY1,021
Bandhan BankBUY406
City Union BankBUY213
DCB BankADD131
Federal BankBUY126
ICICI BankBUY1,001
IndusInd BankREDUCE968
Kotak Mahindra BankREDUCE2,155
Karur Vysya BankADD58
RBL BankREDUCE160
Ujjivan Small Finance BankREDUCE21
NBFCs and HFCsRecommendationTarget Price in Rs
Bajaj FinanceREDUCE6,413
Cholamandalam Investment and Fin Co LtdBUY774
CreditAccess Grameen LtdBUY994
IndoStar Capital Finance LtdREDUCE229
LIC Housing Finance LimitedREDUCE409
Mahindra & Mahindra Financial Services LtdADD207
Repco Home Finance LtdADD290
SBI CARDBUY1,255
Shriram Transport Finance Co LtdADD1,641
Ujjivan Financial Services LtdADD201
Source: hdfcsec.com. Data as of 14 April 2022

Read more about: stocks to buy
Story first published: Sunday, April 17, 2022, 9:27 [IST]
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