3 Banking Stocks To Buy Next Week For High Returns As Recommended By Top Brokers

Three leading brokerage firms are bullish on three Private sector banks, which are AU Small Finance Bank, Bandhan Bank, and IndusInd Bank. The brokerage firms have placed a buy on the stock with attractive valuations for potential gains of up to 38%. Here are the key takeaways about the stocks:

1. AU Small Finance Bank (AUBANK)

Motilal Oswal Assigns Buy on AUBANK with a Target Price of R 740 to the stock. The stock has the potential to give a return on investments of up to 21% if stock is purchased at the current market price. This is a Small cap private sector bank having a market capitalisation of Rs 40,966.89 crore.

The current market price of the stock is Rs 616.35% on NSE. Its 52 week low is Rs 525/share and 52 week high is Rs 732.98/share, respectively. It has fallen 0.55% in a week, and 8.88% in a month, respectively. It moved down 1.17% in 1 year. However, it moved up 39.15% in 3 years and maximum 71.11% in 5 years, respectively.

According to the brokerage, AUBANK reported 30% YoY growth in net earnings (8% beat), driven by lower provisions. However, operating profit came in line with growth in NII, aided by stable margins and healthy loan growth. Gross advances/deposits grew strongly at 38% YoY each, however, CASA deposits witnessed pressure, resulting in CASA ratio moderating to 38%. The absolute amount of GNPA increased 2% QoQ. However, headline GNPA/NNPA ratio improved 9bp/5bp QoQ to 1.81%/0.51%, respectively. PCR ratio improved to 72.1%.

2. Bandhan Bank

Anand Rathi has placed a buy on the stock of private sector midcap bank, Bandhan Bank with a target price of Rs 327/share. The brokerage with the given target price claims up to 38% potential return. Bandhan Bank's market capitalisation is Rs 38,200.88 crore.

The stock last traded on NSE at Rs 237.15/share. It recorded its 52 week high at Rs 349.55/share and 52 week low at Rs 209.55/share, respectively. The stock was listed on 27 March 2018. Since the date of listing its share price has fallen 50.27%. It has fallen 20.94% in 1 year and 50.97% in 3 years, respectively.

According to the brokerage, Diversification across products and regions are strategic priorities of Bandhan Bank. This would transform its business model to be more scalable and sustainable. For this, the bank reinforced its top management, hiring professionals from various private banks. A combination of deepening product penetration and branch penetration across states would drive a 21% loan CAGR over FY23-25. With asset quality issues likely to be peaked out in H2FY23 earnings are expected to normalize thereafter. "We believe, on a sustainable basis, Bandhan would deliver 2.5%+ RoA and 25% RoE. We initiate coverage on Bandhan Bank with a BUY rating and a target of Rs327, valuing the bank at 1.9x FY25e ABV," the brokerage has said.

3. IndusInd Bank

Leading brokerage KR Choksey has assigned a buy on stock of IndusInd Bank with a Target price of Rs 1,550/share. The stock purchased at the current market price (CMP) is likely to give return up to 29%. IndusInd Bank is a large-cap private sector bank with Rs 93,239.78 crore market capitalisation.

The stock's last traded price is Rs 1,202.45/share with the 52-week low at Rs 763.20 and the 52-week high at Rs 1,275.80/share. The stock has fallen 2.59% in a week and 2.13% in 1 month, respectively. It has given maximum 37.08% positive return in 1 year. However, in 3 it fell 9.72% and in 5 years it fell 28.6%, respectively.

According to the brokerage, In Q3FY23, Net Interest Income (NII) increased 18.5% YoY/ 4.5% QoQ to INR 44,954 Mn. NIMs stood at 4.27% for Q3FY23, an expansion of 17 bps YoY/ 3 bps QoQ. The Pre-Provision Operating Profits (PPOP) grew by 11.3% YoY/ 4.0% QoQ in Q3FY23 at INR 36,864 Mn. PAT for Q3FY23 stood at INR 19,636 Mn, an increase of 58.2% YoY and 8.8% QoQ led by healthy operating performance and declining provisions. As of December 31, 2022, GNPA/ NNPA were 2.06%/ 0.62%, respectively, which improved from 2.48% and 0.71% as of December 31, 2021, respectively. Advances grew at 19.0% YoY/ 4.6% QoQ at INR 27,19,660 Mn, while deposits grew 14.4% YoY/ 3.2% QoQ at INR 32,54,910 Mn. The Bank's Total Capital Adequacy Ratio as per Basel III guidelines improved to 18.01% as of December 31, 2022.

Disclaimer

The stocks have been picked from the brokerage reports. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.