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Chat Transcript
05 Jul 2012 - 16:00hrs hrs
Vaibhav Agrawal | VP-Research, Banking
Find out what banking expert says
Chat Transcript
| rajaramkumar198: Pls give ur top picks for banking to trade |
| Vaibhav Agrawal: The environment for the banking sector has still not started to improve with GDP growth slowing down further and inflation remaining sticky. So, in the near term it makes sense to go with quality names, where asset quality is expected to be better. So, I would recommending investing in large private banks like ICICI Bank and Axis Bank, as well as BOB and PNB on the PSU side. Also, Yes Bank is one of our structural top picks. |
| tawakal: Sir, Let me know some multi beggar shares ? |
| Vaibhav Agrawal: You will need some patience - a horizon of 12-18 months. In that horizon, our top picks are all likely to give 30-40% returns. Especially, from a 3-year perspective, Yes Bank is one of the stocks in the banking space that has the potential to double. Some of the ebaten down PSU banks like Punjab National Bank also have the potential to double, but this will require patience, as in the near-term the environment for PNB (like other PSU banks) appears a little challenging. |
| rajaramkumar198: What is TGT of ICICI & Allahabad BK for one month. |
| Vaibhav Agrawal: ICICI bank has a good 30% upside from current levels over a 12-month period. In the near-term, if the market continues to rally upwards (to say 5800-6000 Nifty, then even ICICI bank can be expected to perform better than Nifty. As far as Allahabad Bank is concerned, we have a cautious view on the stock right now - there is a downside risk to their earnings in this and next quarter from NPAs. So, we would recommend avoiding that stock in the near-term. |
| demblavik: Sir, What r ur long term targets for sbi,axis,icici banks?I can hold these stocks for 3-4 yrs. |
| Vaibhav Agrawal: Amongst the 3, SBI has recently already done well, so from hereon I expect about 15% compounded returns on that stock. But ICICI Bank and Axis Bank are amongst the best placed banks in the entire sector over the next 3-4 years. They will gain marketshare, grow earnings at 20%+ CAGR and I expect these stocks to give 30% return in 1 to 1.5-year time frame itself and about 20% CAGR over and above those levels in the following 2-3 years. |
| demblavik: Sir, what do you prefer,BOB or PNB?& why |
| Vaibhav Agrawal: As of now, I`m seeing 25% upside on both as PNB has again bounced back from recent lows. If PNB becomes available at 740-750 levels again in the next month or so, then that is pretty much the bottom valuation-wise fundamentally and one can expect the stock to give absolute returns from those levels. |
| INDOTEXOFAB: Which bank should one invest for short term gains & pls suggest two stocks for the long term say 2 to 3 yrs |
| Vaibhav Agrawal: In both the short-term and long-term, I would recommend holding on to Axis, ICICI and Yes Bank. The reason is that in the short-term, they are likely to less pressure on NPAs as compared to PSU Banks. In th elong-term, once the economic cycle improves, they have the ability to gain maximum market share. Valuations are substantially cheap for them compared to historical levels. |
| demblavik: Sir, whts ur long term view & price target on indusind bank? |
| Vaibhav Agrawal: Indusind bank has done very well under the current management. But the market is already rewarding the stock for this. It has already given very good returns and is trading at pretty expensive levels according to us. Yes Bank is offering similar sort of business growth potential and fundamentals, but is trading almost 20-205% cheaper than Indusind Bank. So, at this point we have a Neutral view on Indusind. |
| yjuvij: can you name one PSU bank, which will outperform in the coming days?? |
| Vaibhav Agrawal: In the large caps, PNB still looks interesting. In the midcaps, United bank is looking good. Beyond a point, identifying outperformers fundamentally over a few days is not feasible and you should consider holding for a longer period. Otherwise, technicals advice can be taken. |
| yjuvij: can you please mention one multi bagger PSU Bank for one year investment horizon? |
| Vaibhav Agrawal: Multi-bagger over 1 year horizon looks challenging as PSU banks are facing challenging times. Like I mentioned, relatively PNB & BOB in large caps, and United Bank in midcaps are expected to perform better. |
| qaengineer: sir your outlook on axis bank and indian bank are they going to move up or has meet resistence level> |
| Vaibhav Agrawal: Axis Bank still looks undervalued. Even in the near-term, if markets go up by 10%, Axis can be expected to go up 15%. We are neutral on Indian Bank, as the bank may deliver negative earnings surprises in coming quarters due to the risk of NPAs. |
| bob7292: i have 400 shares of ifci at 40 wht is short term target |
| Vaibhav Agrawal: We dont track IFCI, as we are not comfortable with financials. |
| goje: Sir, I have 20 Axis Bank @ 1150. What is its 1 year target? |
| Vaibhav Agrawal: Over a 1 year period, our target price is 1489. |
| yjuvij: what is your opinion on Allahabad Bank |
| Vaibhav Agrawal: We have concerns on Allahabad Bank`s asset quality. Earnings could disappoint in coming quarters. Plus, there is a management change, which can throw up some negative surprises as well. So, would avoid it at present. |
| yjuvij: i bought some Federal,Dena, DCB bank, & they are trading higher than my purchase price shall i sell now? or wait .... |
| Vaibhav Agrawal: It is a good level to book gains. Dena has become more expensive than other mid-psu banks after the run-up. Federal Bank has been doing well under new CEO, but recent RBI regulatory changes in NRI deposits will create challenges for Federal Bank`s margins and earnings. Stock has done well, so it is a good time to book gains in our view. We are not tracking DCB as we are not very comfortable about the fundamentals. |
| demblavik: Sir, Dena bank or uco bank? why? |
| Vaibhav Agrawal: Dena is relatively a better bet than UCO. Uco is fundamentally much weaker. It is also more expensive than Dena. Numbers are not consistent at all from quarter to quarter. Dena has a better western region franchise. |
| yjuvij: u you please throw some light on DENA Bank? |
| Vaibhav Agrawal: Stock was very cheap back in Decemeber. Since then, the stock has rallied very handsomely. So, from these levels it may test your patience over a 1 year horizon. Fundamentally, there are reasonably good mid-size PSU banks like United Bank, which are available much much cheaper, and are likely to give far better returns over a 1 year period. |
| ranjitranjandey: plz tell me near term target in IDBI BANK & DELTA CROP. For 1 month |
| Vaibhav Agrawal: IDBI bank has underperformed off-late, so from these levels the stock can be accumulated. |
| satshen: Sir, pls give your views on Karnataka Bank for medium term. |
| Vaibhav Agrawal: The bank is one of the smallest old private banks in the south. Fundamentally there are no major positives. These stocks tend to be a bit speculative. Whenever the markets expect some sort of M&A activity, they start going up. But can come down equally sharply. So, we would avoid it at present. |
