Hot Stocks: Brokerage view on L&T Finance Holdings, Federal Bank, ICICI Bank, and Axis Bank

Global brokerage firm Morgan Stanley sees a strong 2023 for Indian Banks such as ICICI Bank, Axis Bank, Bank of India and Bank of Baroda. Credit Suisse maintained a neutral stance on L&T Finance Holdings, and Morgan Stanley remained overweight on Federal Bank.

We have collated a list of recommendations from top brokerage firms from ETNow and other sources:

Morgan Stanley on Indian Bank: Prefer ICICI Bank, Axis, BOI & Bank of Baroda
2023 will be a strong year of earnings for Indian banks, Morgan Stanley said in a note. Traders can deploy a Barbell strategy that could bring better outcomes this year, said the global brokerage.

"Indian banks registered strong earnings growth in the current year. We expect credit costs to remain benign. We expect the few remaining mid-sized private banks/SoE banks to normalize,” said the note.

The global investment bank expects improvement next year as working capital demand picks up. Large banks should continue to gain share, given better funding costs, it said.

Morgan Stanley prefers ICICI Bank, Axis Bank, BOI, and Bank of Baroda.

Credit Suisse on L&T Finance Holdings: Neutral| Target Rs 94
Credit Suisse maintained a neutral rating on L&T Finance Holdings with a target price of Rs 94. Excess capital is likely to weigh on the return on equity (ROE) of the company.

The global investment bank increased FY23-25E EPS by 1-6% and assigns a higher P/B multiple of 1.0x on faster retailization.

FY24 is likely to turn out to be the year of transition and the strategy to improve profitability. The stock is trading at 1.0x FY24E P/B.

Morgan Stanley on Federal Bank: Overweight| Target Rs 175
Morgan Stanley maintained its overweight stance on Federal Bank with a target price of Rs 175 post December quarter results.

The lender reported a strong beat in Q3. Q3FY23 PAT grew by over 50% YoY, 14% QoQ with core PPoP growth of 52% YoY.

The big surprise was 27% YoY NII growth led by strong growth/higher margins. The management raised NIM/ROA guidance to 3.35-3.4% /1.35% for FY24.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)