Jefferies Maintains 'Buy' on Select Banking Stocks, Sees Up to 30% Upside

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AuthorWhalesbook News Team|Published at:
Jefferies Maintains 'Buy' on Select Banking Stocks, Sees Up to 30% Upside
Overview

International brokerage firm Jefferies has maintained its 'Buy' rating on Kotak Mahindra Bank, IndusInd Bank, and Bandhan Bank following their Q2 updates. Jefferies sees significant upside potential, with targets suggesting up to 30% gains in select stocks. For Kotak Mahindra Bank, a target of Rs 2,550 implies a 21% upside driven by strong loan growth. IndusInd Bank, despite consolidation, has a 'Buy' rating with a Rs 920 target (23% upside), as deposit rate cuts may aid margins. Bandhan Bank also retains a 'Buy' rating with a Rs 215 target (30% upside), with MFI segment trends being key.

International brokerage firm Jefferies has reiterated its 'Buy' recommendations for Kotak Mahindra Bank, IndusInd Bank, and Bandhan Bank, anticipating significant growth following their Q2 updates. The firm sees potential for up to 30% upside in select banking stocks.

For Kotak Mahindra Bank, Jefferies highlighted strong net loan growth of 16% year-over-year (YoY) and stable total deposit growth of 15% YoY, supported by an 11% YoY increase in CASA deposits. The brokerage maintained its Buy call with a target price of Rs 2,550, indicating a 21% upside from current levels.

IndusInd Bank experienced consolidation, with loan growth declining 8% YoY and total deposits falling 5% YoY, notably a 19% YoY drop in CASA deposits. Jefferies attributed the loan growth decline to a fall in corporate and MFI loans. However, they noted that sharper cuts in deposit rates could aid margins from the third quarter onwards. The Buy rating was kept unchanged with a target price of Rs 920, representing a 23% upside.

Bandhan Bank reported softer growth, with loan growth at 7% YoY. Its CASA deposits fell 6% YoY due to rate adjustments and a shift towards term deposits, reflecting softer trends in the MFI segment partly offset by stronger retail segment trends. Collection efficiency in MFI loans remained stable at 97.8%. Jefferies maintained its 'Buy' rating with a target price of Rs 215, implying a 30% upside from current levels.

Impact
This news is highly relevant for investors focused on the Indian banking sector. Analyst ratings and price targets from reputable firms like Jefferies often influence investor sentiment and stock prices. Positive outlooks can drive buying interest, while underlying concerns highlighted can lead to caution. The specific details on loan growth, deposit trends, and MFI performance provide crucial insights for evaluating these banks.
Rating: 7/10

Definitions of Difficult Terms:
Q2 FY26: This refers to the second quarter of the financial year 2025-2026.
YoY: Stands for Year-over-Year, meaning a comparison of a period with the same period in the previous year.
CASA: Stands for Current Account Savings Account deposits. These are typically low-cost funds for banks and indicate customer stickiness.
MFI: Microfinance Institution, which provides financial services to low-income individuals and small businesses.
Margins: The difference between a bank's revenue (primarily interest income) and its expenses (primarily interest paid on deposits and operating costs). Higher margins generally mean higher profitability.
ROA: Return on Assets, a profitability ratio that measures how efficiently a company uses its assets to generate profit.
Brokerage: A financial services firm that buys and sells securities on behalf of clients.

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