Stocks to Buy: HDFC Bank, ICICI , Axis, AU Bank are the 4 top picks of BNP Paribas among Banks: SBI Life in Insurance
Also Read- ICICI Bank share price in focus ahead of Q3 results today. Do you own? BNP Paribas continues to prefer financial services, information technology and telecom, while they have added logistics in their outperformance space. They expect consumer staples, pharma and autos, to underperform given their rich valuations.
Banks -Credit growth is likely to remain healthy, driven primarily by retail and SMEs , while the possibility of an eventual pick up in corporate loan growth provides optionality of further growth acceleration, said analysts at BNP Paribas. Deposit growth, as per them remains reasonably robust at 12.9% y-y, addressing worries about supply-side bottlenecks. The Margin moderation from cyclical peaks has almost played out, and with operating costs already having set a high base in FY24.
BNP Paribas expects FY25 earnings growth to track close to loan growth, with few exceptions. The Valuations remain attractive with most banks trading at or below their long-term (10-year) median Next Twelve months Price by Book value despite the promise of a corporate leverage cycle and best-in-decades balance sheet health and profitability metrics. HDFC Bank, ICICI Bank and Axis Bank are among their top -3 large-cap ideas in order of preference.
AU BANK is their only preferred mid-cap space. Insurance: Given the low base BNP Paribas expect in FY24, FY25 the Insurance companies should deliver high top-line growth along with steady margins. As per BNP the sustenance of the recent uptick in pure protection (term life) sales is going to be a critical factor in determining the extent to which VNB (value of new business) growth can surprise on the upside in CY24.
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