Federal Bank, Axis Bank, and HDFC Bank are three excellent banking stocks that have been bought by three prominent brokers. The brokerage predicts that the stocks will produce big returns in 2023. These three private sector banking equities consist of two large-cap and one mid-cap stocks. Here are the main stock highlights and the brokerage’s opinions:
Federal Bank, Inc.
Federal Bank’s stock is recommended for purchase at Axis Securities’ target price of Rs 170 per share. If purchased at the present market price, the stock with the specified target price would yield a return on investment of up to 25%. The share price yesterday decreased 0.94% from the previous close to conclude at Rs 136.70/share on the NSE. The stock just reached Rs 143.40/share, a new 52-week high. The 52-week low of the stock is Rs. 82.50 per share.
It generated a profit of 39.06% over the past year. In the last three years, the stock has produced a maximum return of 49.24%. It has a market value of Rs 28,754.97 crore and is a midcap stock. As per Axis Securities, “We continue to urge that you BUY the stock. FB continues to be our top choice among mid-sized banks due to its good credit growth visibility, well-managed asset quality, and rising profitability.”
Axis Bank has been assigned a buy rating by reputable brokerage Bonanza Portfolio, with a target price of Rs 1,053/share. According to the brokerage, the price might rise by as much as 14% from where it is now. The price of the stock is currently Rs 924 per share on the NSE, up 0.69% from the previous close. The 52 Early in 2023, the stock reaches a new 52-week high of Rs 970 per share, whereas the previous low was Rs 618.25 per share.
It produced a positive return of 27.41% over the past year. In the last five years, the stock has returned up to 58%. It has a market capitalization of Rs 2,83,800 crore and is a large-cap banking stock. The brokerage claims that over the past few quarters, Axis bank has shown good traction in earning growth and solid growth from overall business mix. Axis Bank has been focusing more on its loan book with high yields. As 68% of its loan book is floating, the company is well positioned to benefit from the scenario of rising interest rates and is looking to maintain the present NIM margin moving forward.
Due to ongoing investments in branch growth, human capital, and digital capabilities that will boost the bank’s NII and operating performance, OPEX is expected to stay high in the future. Slippages in asset quality must be kept under control in order to support asset quality and keep credit costs low. Additional provision buffers ease the stress caused by the reorganised book. Strong operating profits and fewer provisions, which have a direct impact on the bank’s returns ratios, will continue to be the driving force behind earnings expansion in the future.
An important private sector bank, HDFC Bank, is a buy for brokerage firm IBDI Capital. With a target price of Rs 2,070 per share, the brokerage has a buy rating on the company. At the current market price, the stock is projected to return up to 27% if you purchase it.
The stock increased 1.77% from the previous close to conclude at Rs 1,637.30/share in recent transaction on NSE. The 52-week high per share is Rs 1,722.10, while the 52-week low per share is Rs 1,271.60. The stock has increased 7.07% during the past year.
In the previous five years, the stock’s returns reached a maximum of 69.29%. It has a market capitalization of Rs 9,13,082 crore and is a large-cap banking stock.
The firm reports that corporate book led credit growth at HDFC Bank was 19.6% YoY vs. 23.4% (Q2FY23). As GNPA was at 1.23% vs 1.23% QoQ, backed by stronger recoveries, asset quality remained constant. The annualised slippage ratio was 1.75 % compared to 1.5% QoQ. Restructured assets decreased from 0.5% (QoQ) to 0.4% of advances, driven by recoveries and write-offs. At 20% YoY, deposit growth is still very significant. PPoP and NII both increased by 9% QoQ, supported by 12% QoQ growth in other revenue and 8% QoQ rise in fee income. Relative provisions fell by 13%. Credit cost as a result of QoQ was 0.75% instead of 0.9%.
So, PAT increased by 15.6% QoQ. “Based on a P/BV of 3.1x FY25, we have switched to FY25E projections and are maintaining our BUY rating with a new target price of Rs. 2,070 (Rs. 1,860). Be on the lookout for regulatory requirement exemptions “added the brokerage.