2 banking and financial services stocks to buy from Motilal Oswal & Sharekhan

Buy SBI Life Insurance shares, says Motilal Oswal

According to Motilal Oswal, his recent interaction with management indicates a resumption of business momentum, with growth rebounding strongly in all segments.

Management is targeting healthy double-digit growth in FY22 (20-25%), which would be among the best in recent years, the brokerage said.

In addition, according to the Motilal Oswal report, the agency channel has rebounded strongly and is contributing well to business growth. Strong momentum in high margin segments such as annuities and life insurance would help further improve the VNB margin (this margin indicates the profits of a life insurance business).

“We estimate that VNB will increase to 24% of CAGR in fiscal year 21-24E, with operating RoEV maintained at 18% by fiscal year 24E. SBI Life Insurance is one of our favorite choices when it comes to life insurance. We reiterate our purchase on the SBI Life Insurance Rating stock with a target price of Rs 1,400 per share (2.6x 1HFY24E EV), “the brokerage said.

Buy Kotak Mahindra Bank, Says Sharekhan

According to Sharekhan, Kotak Mahindra Bank is well positioned to grow at a steady pace as credit demand picks up and it has a healthy balance sheet (24.7% capital adequacy; Level I capital at 22.8 %), high liability franchise (industry leader CASA at 60.2%) and improvement in the trend in terms of asset quality.

In the second quarter, the brokerage expects slippages to decrease as collection efficiency improves. Therefore, the GNPA ratio is expected to stand at 3.3% in the second quarter, compared to 3.56% in the first quarter. Net interest income is also expected to increase by 15% with better recoveries and increased credit growth in the quarter.

“We expect bank subsidiaries such as Kotak Securities and Kotak Asset Management to perform well in a buoyant stock market. Valuations are attractive after adjusting for subsidiary valuations of Rs 571 per share. We maintain a rating. purchase on the share with a revised target price based on the 2,428 rupees coins valuing the autonomous bank at 4.5 times the book value of fiscal year 23, ”the brokerage said.

It’s time to be careful

Investors are also advised to be cautious as the markets may be overvalued at these levels. According to reports, stocks in India could be overvalued by 15-20%, based on historical price / earnings multiples for the companies Sensex and Nifty. While we select investor brokerage reports for coverage, we also advise investors to invest in small amounts or buy on dips as the best strategy.

Disclaimer

The investment ideas are taken from the brokerage report of Sharekhan and Motilal Oswal. Investors should note that investing in stocks is risky and that neither the author, nor Greynium nor the brokerage house would be liable for any losses based on a decision from the above article.