Goldman Sachs upgrades Axis Bank, ICICI Bank, YES Bank to ‘Buy’

Goldman Sachs on Tuesday upgraded private lenders Axis Bank, ICICI Bank and YES Bank to ‘Buy’ from ‘Neutral’ citing attractive entry after recent underperformance on bad loans concerns.

Axis Bank, ICICI Bank and YES Bank closed 2.67 per cent, 1.12 per cent and 0.28 per cent lower at Rs 482.75, Rs 269 and Rs 729.35, respectively, on Tuesday.

On a year-to-date basis till September 14, ICICI Bank declined 22.9 per cent against 9.88 per cent fall registered by BSE Bank index.

The BSE Sensex declined 6 per cent during the same period. According to Eikon data, ICICI Bank is the only large cap private lender trading below 2 times of its book value.

Lenders with exposure to project finance especially in infrastructure sector have been under pressure over the last few months on worries over rising bad loans.

Goldman Sachs said: “Stocks are now trading at an attractive valuation of 1.6x to 2x of 1 year forward book value.”

The global investment banking firm also upgraded Kotak Mahindra Bank and Bajaj Finance to ‘Neutral’ from ‘Sell’. The share price of Kotak Mahindra Bank closed 0.93 per cent down at Rs 638.90 while Bajaj Finance settled 1.49 per cent up at Rs 5230.05.

Axis Bank

ICICI Bank

Yes Bank