Upside potential is the expected positive increase in the value of an investment. This shows an investor’s potential profit. Evaluating upside potential entails examining market trends, financial performance, and external variables to predict a positive rise in investment value.
Here are the two bank stocks with upside potential of up to 27%;
IDFC First Bank Ltd
IDFC FIRST Bank Limited operates in four segments: Treasury, Corporate, Retail Banking, and Other Banking Business. The Treasury division is made up mostly of the Bank’s investment portfolio, money market borrowing and lending, investment activities, and the Bank’s whole foreign currency and derivative portfolio.
With a market capitalization of Rs 54,926.24 crore, the shares closed at Rs 77.69 per share, increasing around 1.77 percent as compared to the previous closing price of Rs 76.34 apiece.
BoB Capital, one of the well-known brokerages in India, gave a ‘Buy’ call on the bank stock with a target price of Rs 96 apiece indicating a potential upside of 24 percent from Thursday’s closing price of Rs 77.69 per share.
As per the brokerage, IDFC Bank, post-merger with IDFC, shifted focus to retail business, reducing high-cost funds for margin improvement. Advances and deposits surged at 21% and 27% CAGR, respectively, from FY19 to FY23. Current strategy aims for credit and deposit CAGR of 20% and 25% from FY24 to FY29.
Looking into the company’s revenue increased by 33 percent, from Rs 5,912 crore in Q3FY23 to Rs 7,880 crore in Q3FY24. During the same period, net profit grew by 7 percent, from Rs 617 crore to Rs 732 crore.
AU Small Finance Bank Ltd
AU Small Finance Bank Limited offers a wide variety of banking and financial services, including retail banking, wholesale banking, and treasury operations, among others. Its business categories include treasury, retail banking, wholesale banking, and others.
With a market capitalization of Rs 37,880.13 crore, the shares closed at Rs 566.10 per share, increasing around 1.12 percent as compared to the previous closing price of Rs 559.85 apiece.
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the bank stock with a target price of Rs 720 apiece indicating a potential upside of 27 percent from Thursday’s closing price of Rs 566.10 per share.
As per the brokerage, AUBANK’s merger with Fincare is set to bolster its loan portfolio by 16%, targeting a robust 25% CAGR for the combined entity, aiming to surpass a balance sheet size of Rs 1.5t by FY25E. Anticipated growth is driven by strong performance across product lines, with segments like commercial, home loans, and MFI expected to grow at 30% annually.
Looking into the company’s revenue increased by 33 percent, from Rs 2,118 crore in Q3FY23 to Rs 2,736 crore in Q3FY24. During the same period, net profit declined by 7 percent, from Rs 393 crore to Rs 375 crore.
Written by:- Abhishek Singh
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