BackThese bank stocks are Edelweiss' top picks in the sector
The brokerage firm prefers private banks to state banks and NBFCs
PremiumBanks are likely to report a strong Q4FY22 driven by healthy loan growth, stable NIM, a large uptick in collection efficiency and lower credit cost, as per brokerage and research firm Edelweiss.
The brokerage said it prefers private banks to state banks and NBFCs. Edelweiss' top stock picks in the banking space are Axis Bank, HDFC Bank, ICICI Bank, State Bank of India (SBI), Bandhan, SBI Cards and SBI Life. It is also positive on IndusInd Bank in the mid-cap space, whereas Axis Bank and Bandhan Bank are its key result picks.
“Banks are likely to report strong loan growth and flat NIMs. Asset quality is no longer a concern, and we expect slippages to narrow QoQ for a second quarter in a row. Micro loans, housing, CVs, SMEs and NBFCs are likely to be the key segments with high credit demand in Q4. While cost of deposits has inched up, most banks are likely to report stable NIMs in Q4FY22," as per Edelweiss.
The brokerage anticipates tailwinds for sectors such as MFI, which, going by its channel checks, would recover sharply. HFCs would sustain strong traction in home loans and even developer loans would likely grow in Q4 after many slow quarters.
“Banks’ trading gains would plunge in the wake of the run-up in bond yields. Notwithstanding a likely strong Q4, we are watchful of the impact of higher inflation and rates on both loan growth and margins in FY23E," the note stated.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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