2 Banking And Financial Services Stocks To Buy For Good Gains

Motilal Oswal Institutional Equities has listed the stocks of IndusInd Bank and SBI life Insurance to buy for good long term gains.

Buy SBI Life Insurance

The firm has set a price target of Rs 1,500 on the stock of SBI Life Insurance as against the current market price of Rs 1,155.

SBI Life Insurance reported a strong 2QFY22, with APE growth of 46% YoY (5% beat) and VNB growth at a stellar 91% YoY (10% beat). VNB margin improved to 25.9% (up 560bp YoY). However, shareholders' PAT declined by 18% YoY on account of higher claims settled in 2QFY22.

"Persistency has improved across cohorts on a YoY basis, with 13th/49th month persistency improving by 180bp/300bp YoY to 87.7%/69.3% and steady trends in the 61st month to 60.7%," the brokerage has said.

"SBI Life Insurance continues to maintain its cost leadership, while persistency trends have improved on a YoY basis. We estimate APE growth at 23% CAGR over FY21-24E. VNB margin is estimated to reach 26.2% by FY24E, thus enabling 28% VNB CAGR and 18% EV CAGR over FY21-24E. We maintain our Buy rating with a revised target price of Rs 1,500 per share (2.7x Sep'23E EV)," the brokerage has said.

Buy IndusInd Bank

Motilal Oswal has set a price target of Rs 1,400 on the stock of IndusInd Bank. Loan growth picked up sharply, led by Corporate and MFI/Credit Cards, while the Vehicle book remains muted. Retail disbursements have crossed pre-COVID levels across most segments. Deposit trends continue to remain strong, led by Retail term deposits.

"IndusInd Bank reported an in line operating performance, with loan growth witnessing traction, while its liability franchise continues to improve, driving a consistent reduction in funding cost.

"We expect IndusInd Bank to deliver a FY23E RoA/RoE of 1.8%/15.1%. We roll forward our estimates to Sep'23E and maintain our Buy rating with a target price of Rs 1,400 per share (1.9x 1HFY24E ABV)," the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.