Motilal Oswal bullish on Axis Bk, HDFC Bk, ICICI Bk, IndusInd Bk, Yes Bk

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Motilal Oswal has come out with a report on private sector banks.

Private Sector Banks:

Axis Bank: Axis Bank has demonstrated its ability to deliver high RoA of 1.5% despite pressure on asset quality in FY09 and FY10. While margins are likely to moderate, a fall in credit costs, strong loan growth and controlled opex will lead to PAT CAGR of more than 23% over FY10-13. The stock trades at 13.3x FY12E and 11.1x FY13E EPS. Maintain Buy with a target price of Rs 1,590 (2.5x FY13E BV of Rs 636).

HDFC Bank: HDFC Bank is set to deliver EPS CAGR of 29% over FY10-13 v/s 25% over FY05-10. Strong loan growth, led by expansion in rural and semi-urban areas, superior margins of over 4%+, improving operating efficiency impeccable asset quality will ensure RoA of 1.6%+, RoE will improve to 20% by FY13 against 17% expected in FY11. While we are positive about the bank's business, we believe valuations at PBV of 3.4x FY12E and P/E of 19.5x are rich. Maintain Neutral.

ICICI Bank: Structural improvement on the liability side increases our comfort with improved ALM, fall in proportion of bulk deposits and a strong CASA ratio. Aggressive branch expansion (in FY10) and takeover of BoR will help ICICI Bank to keep its CASA share high and improve retail term deposits growth and fee income growth. ICICI bank is our top pick among private banks considering (a) expected improvement in core performance (led by loan growth), (b) strong capitalization among large private banks and (c) value unlocking potential from other business ventures. We expect core RoE to improve to 14% by FY12 and 15% in FY13. Maintain Buy with an SOTP based target price of Rs 1,385.

IndusInd Bank: Strong improvement in core operating performance and faster than expected turnaround of operations demonstrate the management's execution skills. Superior margins, focused fee income strategy and control over C/I ratio will keep core operating profitability strong. Improving liability franchise, structural improvement in RoA and 30% asset growth should help IIB to post one of the highest PAT CAGR (~30%) among the banks under our coverage. We expect RoA to remain strong at ~1.5% over FY11-13. Buy with a target price of Rs 330 (3x FY13E BV of Rs 110).

Yes Bank: Strong growth, proven execution capabilities, diversified fee income and superior return ratios are key positives for Yes Bank, whereas relatively weak liability mix is an overhang (especially in the current scenario).RoA is expected to remain healthy at 1.3-1.5% and RoE at ~23% over FY11-13. Buy with a price target of Rs 415 (2.5x FY13E BV).

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More