4 Angel Broking Top Banking Picks To Buy For Gains Up To 39%
Best Angel Broking Bank Shares buy recommendations for October 2021
|Values of banking and financial services||LTP||Target price||Upside down|
|Shriram City Union Finances||2154||3002||39%|
1. Federal Bank:
Note that the above action recommendations are based on fundamental script analysis and the brokerage also listed their strong fundamentals in the report:
It is one of the largest older generation private sector banks in India. At the end of fiscal year 2021, the bank had total assets of Rs. 1.9 lakh cr. with deposits of Rs. 1.56 lakh cr. and a loan book of Rs. 1.2 lakh cr.
The Federal Bank released a good set of figures for the first quarter of fiscal 22 despite the second wave of Covid as NI / PPOP rose 9.4% / 21.8% year-on-year. Procurement for the
quarter was up 22% yoy, as a result of which PAT was down 8.4% yoy.
The overall quality of assets held up well in Q1FY22 despite the second wave of Covid. We expect asset quality to improve from T2FY22 given the continued openness
economy. We expect the Federal Bank to show 22.8% / 23.7% / 23.2% NII / PPOP / PAT growth between FY20-23 and remain positive on the bank.
2. HDFC Bank:
This entity is the largest private sector bank in India with an asset portfolio of Rs. 11.3 lakh crore in FY21 and deposit base of Rs. 13.4 lakh crore. The Bank has a very well distributed portfolio, with wholesale making up 54% of the asset portfolio while retail making up the remaining 46% of the loan portfolio.
T1FY22 figures were impacted due to the second wave of Covid which resulted in an increase in GNPA / NNPA from 15 / 8bps QoQ to 1.5% and 0.5% of
The Bank posted NII / PPOP / PAT growth of 8.6% / 18.0% / 16.1% for the quarter despite higher provisioning thanks to strong loan growth of 14.4% year-on-year.
Management has indicated that 35 to 40 days of collections have been lost, but expects healthy recoveries from slippages in fiscal year 2QFY22, which should lead to lower credit costs going forward. “Given the best-in-class asset quality and the expected rebound in growth from T2FY22, we are positive for the bank given reasonable valuations at 3.0xFY23 adjusted, which is below historical averages,” adds the brokerage company.
3. AU Small – Buy for 39% Upside as loan growth may lead to a reevaluation of the script:
It is one of the leading small financial banks with AUM ofRs. 34 688 Cr. at the end of T1FY22. The Wheels (auto) and SBL-MSME segments represent 37% and 39% of assets under management, respectively.
The figures for the first quarter of fiscal 22 were better than expected despite the impact of the second wave of Covid. AU reported 40.4% / 1.2% / 1.2% NII / PPOP / PAT growth
respectively in Q1FY22 while the GNPA / NNPA ratios stood at 4.3% / 2.3% advances against 4.3% / 2.2% in Q4FY21.
Collection efficiency remained strong in April / May / June at 95% / 94% / 114% respectively while GNPA remained stable at Rs. 1,503 cr. sequentially. Given the stability of asset quality, we expect loan growth to accelerate in the second quarter of fiscal 22, which should lead to a revaluation of the bank.
4. Union Finances of the Town of Shriram:
As part of the Shriram Group, the company is engaged in the business of high margin small business loans, which accounted for 57.3% of the loan portfolio at year-end 20. The company also offers auto loans, 2 wheels, gold and personal.
The company released a good set of figures for the first quarter of fiscal 22 due to a positive surprise on the asset quality front. The NII for the first quarter of fiscal 22 was up 5.23% yoy to Rs. 920 crore while the PPPP was up 0.4% yoy to Rs. 569 crore. The provision in the quarter was down 6.5% year-on-year to Rs. 290 crore as profits rose by
8.1% YoY at Rs. 208 crores.
AUM flat at Rs. 29,599 crore in the last quarter concluded. SCUF reported only a marginal deterioration in asset quality, with gross phase 3 lending increasing 54 basis points qoq to 6.91%, while net phase 3 in the quarter increased to 3.46% and the PCR ratio stood at 49.9%.
The above actions are taken from Angel Broking’s brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.