Best banking stocks to buy for medium to long term perspective

Best banking stocks to buy for medium to long term perspectiveBest banking stocks to buy for medium to long term perspective

Investments in the equity markets have been providing good returns over a long term perspective. Identification of good stocks is a key for the success. Earlier we have posted, best stocks to buy for long term investment across all sectors. In this post we have analyzed some of the best banking stocks to buy for long term investment from large cap sector.

Best stocks to buy for medium to long term perspective

1) ICICI Bank: ICICI Bank is the largest private sector bank in India. The loans are expected to grow at approx 20% for FY 13. ICICI Bank capital adequacy ratio is around 18% to 19% which provides good opportunity to ramp-up its business. Currently it is trading at Rs 1122. This is one of the best stocks to buy in India for long term objective.

Why you should buy ICICI Bank

  • Consistent good performer in the last 5 years
  • Revenues have grown by 29% (QoQ) in Q3-FY13 and 29% (YoY) in FY12.
  • Profits have grown by 30% (QoQ) in Q3-FY13 and 25% (YoY) in FY12.
  • EPS is growing year on year Rs 37 in 2008 vs Rs 56 in 2012.
  • Top mutual funds holding highest share in their portfolio
  • UTI Dividend Yield Fund       8%
  • HDFC Growth Fund              8%
  • ICICI Pru Infrastructure        8%
  • SBI Magnum Contra Fund     8%
  • SBI Magnum Multiplier Plus  8%
  • HDFC Equity Fund               8%
  • DSP-BR India TIGER – RP     7%
  • HDFC Top 200 Fund            7%

2) HDFC Bank: HDFC Bank is the second largest private sector bank in India.  Currently it is trading at Rs 640. This is one of the good stocks to buy in India for long term perspective.

Why you should buy HDFC Bank

  • Consistent good performer in the last 5 years.
  • Revenues grown from Rs 12,354 Crores in FY 2008 to Rs 32,539 Crores in FY 2012. This shows a solid growth.
  • Revenues have grown by 21% (QoQ) in Q3-FY13 and 36% (YoY) in FY12.
  • Profits have grown by 32% (QoQ) in Q3-FY13 and 30% (YoY) in FY12.
  • EPS is growing year on year. Bank estimates EPS to grow in current FY 13 year @ 29% and in FY14 at 26.28% growth.
  • Top mutual funds holding highest share in their portfolio. This is the best stock to buy for long term investment as there is good interest by mutual fund companies.
  • Reliance Banking Fund             14%
  • SBI Magnum Equity Fund          10%
  • ICICI Pru Focused Blue-chip      9%
  • Tata Infrastructure Fund          9%
  • Axis Equity Fund                      8%
  • SBI Magnum Tax Gain               8%
  • Tata Indo-Global Infra              7%
  • UTI Top 100 Fund                     7%
  • L&T Equity Fund                      7%
  • UTI Mastershare                       7%

3) State Bank of India: SBI is the largest public sector bank in India. SBI has been consistent performer year on year with its large base of customers. Currently it is trading at Rs 2,333. This is among the good stocks to buy in India in banking sector.

Why you should buy SBI:

  • Revenues have grown by 14% (QoQ) in Q2-FY13 and 30% (YoY) in FY12.
  • The revenue growth for FY13 and FY14 is expected at 14-15%.
  • Profits have grown by 30% (QoQ) in Q2-FY13 and 41% (YoY) in FY12.
  • EPS is growing year on year Rs 106 for FY2008 vs Rs 174 in FY2012.
  • Estimated EPS for FY13 is Rs 214 and FY14 is Rs 248 which indicates that profits would grow in future.
  • Top mutual funds holding highest share in their portfolio

    • HDFC Equity Fund               9%
    • HDFC Infrastructure Fund    9%
    • SBI PSU Fund                      9%
    • HDFC Long Term Equity      9%
    • Reliance Vision Fund – RP   9%
    • HDFC Top 200 Fund            9%
    • Axis Focused 25 Fund         9%
    • Sundaram Fin-Serv. Opp     9%
    • Reliance Banking Fund        7%
    • Reliance Quant Plus – RP     7%

4) Axis Bank: Axis Bank is the 3rd largest private sector bank after HDFC and ICICI bank in terms of market capitalization.  Currently it is trading at Rs 1,508. This is one of the best stocks to buy from medium to long term perspective.

Why you should buy Axis Bank

  • Consistent good performer in the last 5 years
  • Revenues have grown by 21% (QoQ) in Q3-FY13 and 45% (YoY) in FY12.
  • Profits have grown by 22% (QoQ) in Q3-FY13 and 25% (YoY) in FY12.
  • EPS is growing year on year Rs 30 in 2008 vs Rs 102.67 in 2012. EPS estimates for FY 13 is Rs 116 and Rs 136 for FY 14.
  • Top mutual funds holding highest share in their portfolio
  • UTI Infrastructure Fund      6%
  • Franklin High Growth Cos   6%
  • Franklin (I) Flexi Cap          5%
  • Reliance Banking Fund       5%
  • UTI Leadership Equity        4%
  • UTI Master Plus US             4%
  • Kotak 50 (G)                      4%
  • UTI Master Equity Plan       4%
  • UTI Opportunities Fund      3%
  • L&T Special Situations        3%

5) Kotak Bank: Kotak Bank is the 4th largest private sector bank after in terms of current market capitalization.  Currently it is trading at Rs 672.

Why you should buy Kotak Bank

  • Consistent good performer in the last 5 years
  • Revenues have grown from Rs 2,820 Crores in FY08 to Rs 7,032 Crores for FY12.
  • Revenues have grown by 27% (QoQ) in Q2-FY13 and 43% (YoY) in FY12.
  • Profits have grown by 31% (QoQ) in Q3-FY13 and 32% (YoY) in FY12. This is one of the best stocks to buy by just looking at the profit margins growth quarter on quarter or year on year.
  • EPS is growing year on year Rs 8.53 in 2008 vs Rs 14.65 in 2012. Estimates for FY13 are Rs 27.6 and Rs 33.2 for FY14.
  • Top mutual funds holding highest share in their portfolio
  • ICICI Pru Focused Bluechip     5%
  • Axis Long Term Equity Fund    5%
  • DSP-BR Top 100 Equity           4%
  • Franklin India Bluechip           3%
  • FT India Balanced Fund          2%
  • Franklin India Tax Shield        2%
  • Franklin India Prima Plus        2%
  • JPMorgan India Equity Fund    2%
  • DSP-BR Equity Fund – RP        2%
  • DSP-BR Equity Fund – RP        2%

Conclusion: The above best banking stocks to buy in India are for long term investment perspective. Market have reached peak level and started correcting now. Investors can watch for any market correction and in case of any fall in these stock prices, grab the opportunity, buy them and invest in these best investments.

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Suresh
Best banking stocks to buy for medium to long term perspective

2 comments

  • Amit

    Advice me for investment in best banking n pharmacy sector, because I am totally new in this field

  • Ravikumar N

    Dear Suresh,

    We can add the following banks also in the list:

    Yes Bank, Indus Ind Bank, Karnataka Bank

    However, expecting some corrections in the above mentioned banks, and we need to wait some more time to enter into these stocks.

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