Best Banking Stocks in India 2024

31 May 2024
9 min read
Best Banking Stocks in India 2024
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(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalization)

The banking sector in India is a vital component of the country's economy. It plays a pivotal role in financial intermediation, credit allocation, and economic development. The sector comprises various types of banks, including public sector banks, private sector banks, foreign banks, cooperative banks, and regional rural banks.

Banking Industry in India - A Quick Synopsis

The banking industry in India has witnessed several changes over the years. It was once dominated by public sector banks, but now private sector banks have also been able to enter this market and compete with their rivals. The Indian banking sector has been growing at a rapid rate. In fact, it has been growing at the fastest pace in the world.

The growth of the Indian banking sector can be attributed to a number of factors. The most important factor is that banks in India are now able to compete with other global financial institutions. This is because many of them have become more efficient and streamlined since they were privatised in 1991.

While the banking sector in India offers investment opportunities, investors should conduct thorough research and consider various factors before making investment decisions. It's essential to assess the financial health, growth prospects, and competitive positioning of individual banks before investing in the sector.

Additionally, staying updated on regulatory changes and macroeconomic indicators is crucial for making informed investment decisions in the banking sector.

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Best Bank Stocks in India 2024 as per Analyst Ratings

The banking sector is growing at a very fast pace. India's digital lending market had a notable growth of CAGR 39.5% over a span of 10 years. For retail investors to benefit from this growing sector, here we have listed down some of the best banking sector stocks as per BUY analyst ratings.

The list has been made as per the analyst ratings provided by the I/B/E/S database. These ratings are an aggregation of investment calls that registered stock market analysts provide.

The stock ratings are provided by the analysts after thorough research on the company, financials, market predictions, etc. They primarily provide 3 recommendations, i.e. Percentage Buy Recommendations, Percentage Hold Recommendations, and Percentage Sell Recommendations.

Now, let’s have a look at the list-

S.No.

Best Bank Stocks in India (as per analyst ratings)

Category

BUY Analyst Rating (in %)

1.

HDFC Bank Ltd.

Private

90.48

2.

ICICI Bank Ltd.

Private

90.24

3.

IndusInd Bank

Private

90.24

4.

SBI

Public

90.00

5.

Axis Bank Ltd.

Private

89.47

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Top Bank Stocks in India in 2024 (as per Market Capitalization)

Here, we have listed down some of the top banking sector stocks as per market capitalization.

S.No.

Best Banking Stocks in India (as per Market Capitalization)

Category

1.

HDFC Bank Ltd.

Private

2.

ICICI Bank Ltd.

Private

3.

SBI

Public

4.

Kotak Mahindra Bank

Private

5.

Axis Bank

Private

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Banking Stocks in India as per Analyst Ratings

Here is a brief overview of the banking stocks in India as per analyst ratings -

1) HDFC Bank

HDFC Bank Ltd. (HDFC) is an Indian bank headquartered in Mumbai, Maharashtra. The company was founded on March 11, 1994, by HT Parekh. It has a network of over 6,342 branches and 18,130 ATMs.

HDFC Bank is India's second-largest private-sector lender by assets and market capitalization. The bank provides personal banking, corporate banking, asset management, life insurance & mutual funds.

The company has a presence in 19 countries and offers financial services such as deposits, loans, insurance, and mutual funds. HDFC Bank provides a range of financial services, including personal banking, corporate banking, asset management, private banking, payment and remittance services, cards & internet banking, etc.

2) ICICI Bank

ICICI Bank is a leading Indian banking and financial services company. Established in 1994, the company offers a wide range of financial products and services to individuals, small businesses, and large corporations.

The company has a presence in all states of India, as well as branches in Bahrain, Dubai, and Singapore.

Banking Fun Fact - Groww

3) IndusInd Bank

IndusInd Bank is an Indian retail and commercial bank that provides banking services to individuals, small and medium businesses, and large corporations.

The company offers a range of products and services, including deposit products, loans, credit cards, insurance, and mutual funds. IndusInd Bank is headquartered in Mumbai, Maharashtra.

The company provides banking services across all segments of the market, including individuals, small and medium-sized enterprises, large corporate clients, and institutional investors, both domestically and internationally.

4) State Bank of India (SBI)

State Bank of India (SBI) is a multinational public sector bank. It was started on 1 July 1955 and is headquartered in Mumbai, Maharashtra. It is one of the most renowned banks in India, operating over 22,000 Branches in India and approximately 229 Branches in 31 countries internationally.

It offers a wide range of products and services, such as savings accounts, fixed deposits, personal loans, home loans, business loans, debit cards, credit cards, and many more. With its multiple products, the bank has been catering to almost every banking need of customers.

5) Axis Bank

Axis Bank is one of the leading private-sector banks in India. It has been listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) since 1993. The company offers a range of financial products and services to individuals, small and medium enterprises (SMEs), large corporates, non-resident Indians (NRIs), other financial institutions, and high-net-worth individuals.

The bank offers a wide range of financial products, including deposits, loans, insurance, mutual funds, wealth management services, credit cards, and forex trading.

Factors to Consider Before Investing in Banking Stocks in India

Investing in banking sector stocks can be an exciting venture if done correctly. However, there are some factors that you need to consider before investing in these stocks. Here are some of them:

  • Economic Environment

Assess the overall economic conditions, including GDP growth, inflation rates, interest rates, and employment levels. A strong economy typically bodes well for the banking sector as it stimulates borrowing and lending activities.

  • Financial Performance

Analyze the financial performance of the bank, including key metrics such as net interest margin (NIM), return on assets (ROA), return on equity (ROE), and efficiency ratio. Look for consistent earnings growth, strong asset quality, and stable liquidity.

  • Asset Quality

Assess the bank's asset quality by examining the level of non-performing assets (NPAs) or bad loans, provisioning coverage ratios, and trends in loan delinquencies. Banks with lower NPAs and robust credit risk management practices are generally more attractive to investors.

  • Competitive Positioning

Consider the bank's market share, competitive strengths, and strategic initiatives. Evaluate factors such as product offerings, distribution channels, customer service, brand reputation, etc.

  • Regulatory Environment

Understand the regulatory framework governing the banking sector, including policies set by the Reserve Bank of India and other regulatory bodies. Changes in regulations can impact profitability, capital requirements, and compliance costs for banks.

Should You Invest in Banking Stocks?

Banking stocks offer investors the opportunity to generate long-term capital appreciation through growth in the banking sector.

The Indian banking sector has been able to outperform most other sectors of the economy over the past few years, but it has also been hit by some major setbacks. Therefore, investors must carry out detailed research on the banking stocks that they plan to include in their portfolios

While picking the best bank stocks to buy for your portfolio, it is important to consider your risk appetite, stock’s historical returns, company performance, market capitalization and business outlook, among other factors. 

Conclusion

The banking industry is pivotal to the economy, offering investors a promising opportunity amid its growth. Factors like increasing interest rates, stringent regulations, and robust earnings contribute to a positive outlook for banks.

With the Indian economy ranking among the world's fastest-growing, its banking sector is poised to shape the nation's future.

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*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the top banking sector stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size.

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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