Stocks to buy: ICICI Bank, IndusInd Bank, BoB among Motilal Oswal’s top picks in financial services sector
Motilal Oswal Financial Services expects systemic loan growth to remain healthy at 14% YoY in FY24, driven by continued traction in the Retail and SME segments. It estimates its banking coverage universe (excluding HDFC Bank) to report earnings growth of around 22% YoY in Q2FY24. Read here: Banking sector earnings preview: Expect a decent YoY earning growth in Q2 despite NIM compression, says Motilal Oswal ICICI Bank, IndusInd Bank, Bank of Baroda and SBI Life Insurance Company are the top picks of Motilal Oswal in the Banking, Financial Services and Insurance (BFSI) space.
ICICI Bank has reported strong growth and profitability for the past few years while increasing provision coverage ratio (PCR) to around 83% as of Q1FY24, the highest in the industry. The bank is becoming a growth leader in the SME and Retail segments, aided by continued investments in technology and partnerships with new ecosystem players. Brokerage firm Motilal Oswal expects an 18% loan CAGR over FY23-25 for the bank.
“ICICI Bank has room for re-rating as it continues to deliver solid return ratios and sustainable growth, led by its focus on core operating performance. We estimate RoA/RoE of 2.2%/18.0% in FY25," Motilal Oswal said. The brokerage has a ‘Buy’ rating on ICICI Bank with a target price of ₹1,150 per share, implying an upside of more than 22% from Thursday’s closing price.
Read RBI Policy Live Updates here IndusInd Bank has reported healthy Q1FY24 performance with earnings growth of 30% YoY, aided by healthy net interest income (NII) growth of 18% YoY and lower provisions. Margins have been flat for the last few quarters, with growth in advances driving the overall profitability. IndusInd Bank has maintained its market share of ~2% of net
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