Bank stocks to buy: Jefferies sees growth at reasonable price; recommends SBI, ICICI Bank, Axis Bank, Kotak Mahindra Bank - check targets

Bank stocks to buy: According to Jefferies, most banks are well-capitalised, but as growth stays healthy, select banks may consider capital raises in 2H23

Bank stocks to buy: The report further states that concern on deposit growth may ease and the sweet spot-on credit costs may stay, Image Source- Pixabay

Bank stocks to buy: Brokerage firm Jefferies is bullish on bank stocks as it believes that despite 21 per cent returns by Nifty Bank in 2022, valuations are still reasonable with good earning visibility and the sector will see healthy profit growth and rise in Return on Equity (ROE) in 2023.

According to Jefferies, most banks are well-capitalised, but as growth stays healthy, select banks may consider capital raises in 2H23; pipeline estimates of $5-7 billion with Axis Bank and SBI as potential front-runners. With consolidation among fintechs and need for stake sales, banks may review merger and acquisition.

Jefferies also believes that credit growth will normalise from peak and capital expenditure will pick up.

The report further states that concern on deposit growth may ease and the sweet spot-on credit costs may stay.

Bank Stocks To Buy: SBI, ICICI Bank, Axis Bank and others:

Stocks	Rating	Price Target
Axis Bank	Buy	INR 1,110
Bandhan Bank	Buy	INR 340
IndusInd Bank	Buy	INR 1,600
ICICI Bank	Buy	INR 1,150
Kotak Mahindra Bank	Buy	INR 2,470
Punjab National Bank	Buy	INR 36
State Bank of India	Buy	INR 760

The brokerage firm has predicted that there will be 25 basis points (bps) to 50 bps of rate hikes, but by 2H23 the Reserve Bank of India (RBI) may start cutting rates.

Election politics may not be a big issue and a hike in foreign ownership limit for private banks can attract capital, said the brokerage report.

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Bank stocks to buy: Jefferies sees growth at reasonable price; recommends SBI, ICICI Bank, Axis Bank, Kotak Mahindra Bank - check targets

Bank stocks to buy: According to Jefferies, most banks are well-capitalised, but as growth stays healthy, select banks may consider capital raises in 2H23

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