Jul 19, 2013, 01.55 PM IST
In an interview to CNBC-TV18, Darpin Shah advises to stick with the private sector banks as there is no near-term trigger to push the PSUs up. He is bullish on Axis Bank, ICICI Bank and IndusInd Bank.
In an interview to CNBC-TV18, Darpin Shah, assistant vice president, Institutional Research, HDFC Securities shares his views on Q1 bank earnings and his expectations going ahead.
After Axis Bank posted better-than-expected results , HDFC Securities has upgraded the stock to 'buy' with a target price of Rs 1,570.
Q: On Thursday, Kotak Mahindra Bank delivered asset quality pressures but on the flip side Axis Bank was quite stable in terms of its asset quality. How would you rate both those banks now?
A: The Street was waiting for asset quality issues in Axis Bank given the exposure in various riskier assets like infrastructure and power. However, over the period they have managed to diversify their portfolio towards retail, which now form around 29 percent of their portfolio and has been growing on a much healthier side. They have well diversified those portfolios and managed to hold their asset quality very well.
Coming to Kotak Mahindra Bank , we do not have coverage on Kotak but the asset quality has been very much in control for them, there was some spike because of corporate accounts that turned non-performing asset (NPA) this quarter. However, they are still under much manageable control for the bank.
A: We have upgraded our stock to buy. We had a neutral rating for Axis Bank. Therefore, post the number we have upgraded a buy. Our target price is roughly around Rs 1,570.
Q: What are your top picks in banking space and your top avoids now?
A: The measures which Reserve Bank of India (RBI) has taken and the way things have happened in the last 30-45 days, it is clear that one should stick to private banks. The quality names should be there while public sector undertakings (PSUs) are attractive, there is no major near-term trigger for them to move up again. So, stick to private banks. We prefer Axis Bank, ICICI Bank and IndusInd Bank amongst the private banks.
Markets face resistance; Nifty likely to correct soon
After expansion comes contraction - this is the theme which the stock markets have begun to work on. This letter has been upbeat on the market. We still are, when it comes to the long term. The short term scenario may be different. For short term traders the strategy should be to take swing trades lasting one or two days, only on extremes.
Action in Axis Bank
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