Goldman Sachs initiated Buy ratings on ICICI Bank with a target price of ₹1,935, implying 37% upside, and Kotak Mahindra Bank at ₹509, implying 31% upside.
It also initiated HDFC Bank at ₹861, implying a 19% upside, Axis Bank at ₹1,477 with 19% upside, Federal Bank at ₹425 with 19% upside and AU Small Finance Bank at ₹1,270 with 18% upside.
The brokerage initiated Neutral ratings on IndusInd Bank, IDFC First Bank, Bandhan Bank and State Bank of India. It set target prices of ₹1,020 for IndusInd Bank, ₹92 for IDFC First Bank, ₹180 for Bandhan Bank and ₹1,170 for SBI.
private banks is already reflected to a large extent in valuations, while further re-rating would require sustained RoEs above the cost of equity.
RBL Bank with a target price of ₹285, implying 26% downside, while Yes Bank was assigned a target of ₹22, implying 2.1% downside. Bank of Baroda and Punjab National Bank were also initiated at Sell, with target prices of ₹245 and ₹103, respectively.
NIMs are expected to trough over the next two quarters before gradually recovering. Goldman Sachs also expects asset quality to remain benign, with stress largely confined to granular unsecured loans.
For state-owned banks, Goldman Sachs expects gradual credit-cost normalisation and structurally lower core PPoP margins to weigh on RoA progression.
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