Goldman Sachs bullish on private banks
Analysts at Goldman Sachs believe the sharp correction in private bank stocks on Thursday following the post-election results presents a good opportunity to accumulate these stocks.
Notably, private bank stocks rebounded significantly within two days after experiencing a steep decline due to post-election uncertainty.
Shares of HDFC Bank, ICICI Bank, Axis Bank, IndusInd Bank, and Federal Bank surged up to 8% over two days on Thursday, compared to a 4% rise in the benchmark Nifty 50 index during the same period.
Goldman Sachs analysts remain optimistic about HDFC Bank, Kotak Bank, Axis Bank, and IndusInd Bank.
“The fundamentals are more important than the narrative. We continue to favor private banks over PSUs,” they stated in a note.
In Q4FY24, private banks saw robust credit growth at 30% year-on-year.
According to the latest RBI data, overall credit growth for the banking system was healthy at 20% year-on-year in May 2024, bolstered by the merger of HDFC and HDFC Bank, and stood at 16% when adjusted for the merger’s impact.
Kotak Institutional Equities also noted that banks had a strong Q4FY24, with operational profitability holding up, improved asset quality, and a continued decline in the proportion of delinquent loans on the balance sheet.
