Macquarie, a leading global brokerage known for its sharp sector insights, has turned optimistic on India’s financial sector. In this article, we will dive deep into what things are about the sectors and particular stocks.
Macquarie has changed its stance on India’s financial sector, finding it stable, strong, and resilient, with expectations for mid-teen EPS growth over the next three years. Although margins are under some pressure, the brokerage believes banks can achieve up to 15 percent earnings growth. This growth will originate from improved credit growth and reduced credit costs.
Private sector banks remain Macquarie’s top choice due to their healthy balance sheets and increasing return on equity (ROE), except Kotak Mahindra Bank. Macquarie expects Net Interest Margins (NIMs) to remain stable, and it anticipates a full margin recovery by FY27. A rise in unsecured lending should help support margins, while concerns about non-performing loans (NPLs) are easing in the first half of the fiscal year.
The brokerage has taken into account 100 basis points of prior rate cuts in FY26, but it believes margin compression will stay limited. HDFC Bank and Axis Bank are its top selections among banks.
Re-ratings
- Macquarie has changed its ratings and target prices for several financial stocks.
- IndusInd Bank was downgraded sharply from Outperform to Underperform, with the target price reduced from Rs 1,210 to Rs 650.
- In contrast, PB Fintech was upgraded from Underperform to Neutral, with the new target set at Rs 1,945, up from Rs 1,530.
- Kotak Bank was downgraded to Neutral from outperform, but its target price was raised slightly to Rs 2,300.
- SBI whyCards also moved to Neutral from outperform, seeing a small target increase to Rs 1,040.
- HDFC Life was downgraded to Underperform from neutral, even though its target price rose to Rs 720.
Macquarie’s view highlights strong potential in select private banks and undervalued NBFCs. Before investing, it is always said to do your research, as risks and returns vary by stock. Every company is different, so choose what matches your goals and risk comfort.
Written by Satyajeet Mukherjee
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
