After the announcement of strong Q1 results by private lenders like Axis Bank, HDFC Bank, and ICICI Bank, which stock should you buy?
ICICI Bank Vs HDFC Bank Vs Axis Bank: After the announcement of strong Q1 results by private lenders like Axis Bank, HDFC Bank, and ICICI Bank, strong buying interest is expected in these stocks. According to stock market experts, the Nifty Bank index has logged nearly a 6 per cent rise in last week’s session and after strong Q1 earnings, this rally in the Bank Nifty index is expected to continue further. Commenting on the strong numbers posted by these private banks, Gaurav Jani- Research Analyst, Prabhudas Lilladher, said: “With normalized business scenario, RBI’s sectoral credit data is showing an upward trend despite the first quarter being usually weak, registering a growth of 12.6 per cent YoY in May’2022 (compared with 4.9 per cent YoY growth in May’ 2021). YTD credit grew by 1.2 per cent vs -1.4 per cent YTD ’21 credit growth same period last year. Retail offtake continues to remain a mainstay, while unsecured retail has also seen improved demand. Hike in the interest rates have led to an increase in yields faster than costs, however, the entire benefit of yields is yet to flow through. On the asset quality front, GNPA/NNPAs have been stable QoQ which has led to declining in credit costs.”
ICICI Bank
ICICI Bank reported a growth of around 50 per cent in net profit to Rs 6,904.94 crore for the April to June 2022 period against Rs 4,616.02 crore in Q1FY22. The private lender also registered net interest income of Rs 13,210.02 crore in Q1FY23, logging 20.8 per cent jump against Rs 10,935.76 crore in Q1 FY2021-22.
Axis Bank
Yesterday, Axis Bank reported a net profit of Rs 4,125 crore in the opening quarter of FY23, a jump of 91 per cent annually but remained flat sequentially. While the bank has beaten street estimates, its business growth momentum has come in lower than its peers.
The bank’s key financial parameters showed improvement with net interest income clocking a growth of 21 per cent year-on-year and 6 per cent sequentially, as net interest margins improved by 14 bps annually and 11 bps sequentially to 3.60 per cent during the quarter. This bank’s margins have hit a 20-quarter high.
HDFC Bank
Similarly, HDFC Bank reported a 19 per cent year-on-year (YoY) rise in standalone net profit to Rs 9,195.99 crore for the quarter eneded June 30, 2022. The largest private lender in the country reported a total revenue growth of 13 per cent to Rs 41,560.27 crore in June 2022 quarter as against Rs 36,771.47 crore in June 2021 quarter.
Prabhudas Lilladher said that they continue to prefer ICICI Bank as the bank has consistently outperformed with earnings quality improving each quarter. (Target Price Rs 950), followed by Axis Bank as the preference for profitability over growth could bode well, as systemic asset quality risks are benign and valuation discount with ICICI Bank should narrow (Target Price Rs 940) and HDFC Bank (Target Price Rs 1740) on a long-term basis.
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