2 bank stocks to buy next week for good returns in 1 year
Buy AUBANK for a target price of INR 1,550
“AUBANK has divided its business into 10 SBUs, where each SBU will have its own growth structure/strategy supported by shared verticals and support functions. contributes to sustainable growth,” the brokerage noted.
According to Motilal Oswal, “AUBANK delivered strong operational performance and robust business growth, while asset quality was particularly resilient in a challenging economic environment. With improving economic activity (as evidenced by leading economic indicators – GST collection, GDP growth, and PMI), the bank appears on track to deliver superior growth as the retail deposit mix continues to improve, supporting the margin profile.”
“Collection efficiency is healthy at 106% and the bank has contingent reserves of INR 3 billion (75 lending basis points), which provides additional comfort. We estimate that AUBANK will generate a CAGR of earnings by around 35% in FY22-24, while RoA/RoE improves to 2.1%/20.4% in FY24E We maintain our BUY rating with a TP of 1 INR 550 (based on 4.5 x FY24E BV), implying 33% upside potential,” Motilal Oswal noted.
Buy HDFC Bank for a target price of Rs 1,955
According to ICICI Securities, “The geopolitical situation creates macroeconomic uncertainties/volatilities, but there is no direct impact on the bank’s portfolio and it is constantly assessing the situation. Retail loan growth is at a inflection and will intensify as momentum continues in commercial lending The strategic and execution direction to effectively implement the Future Ready project will begin to deliver results A tighter lending architecture will help the cost of medium-term credit to stand at a lower level than recent averages The cumulative credit contingency + floating buffer of 80 basis points not only makes the bank more resilient for all uncertainties, but also helps to experiment with new products, new geographies and new customer profiles.”
“Interaction with senior management at HDFC Bank suggests the bank is well prepared to support growth in teen loans and advances. Visibility continues to be high on its consistent earnings and >2% RoA / >18 % RoE for FY23E / FY24E Nevertheless, the stock has corrected >10% over the past year and has underperformed Nifty by around 20% and Bank Nifty by around 7%.
The stocks were selected from the brokerage report of Motilal Oswal & ICICI Securities. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.