Goldman Sachs Rates 14 Indian Banks: Buy, Sell, Neutral Calls

Goldman Sachs has commenced coverage on 14 Indian banks, adopting a constructive stance on a substantial portion of the nation’s banking sector. The firm projects private banks are at a critical juncture where profitability will become the primary driver of stock performance.

Key ‘Buy’ Ratings Among Private Sector Lenders

• HDFC Bank received a ‘Buy’ rating with a target price of Rs 861, anticipating core pre-provision operating profit (PPoP) growth to inflect in FY27.
• ICICI Bank secured a ‘Buy’ rating and a target of Rs 1,935, identified as a “multi-year earnings compounding story.”
• Axis Bank was rated ‘Buy’ with a target of Rs 1,477, driven by expected PPoP recovery and undemanding valuations.
• Kotak Mahindra Bank earned a ‘Buy’ rating and a target of Rs 509, described as an “underappreciated franchise.”
• Federal Bank also received a ‘Buy’ rating, set at a target price of Rs 425.
• AU Bank saw a ‘Buy’ rating with a target price of Rs 1,270.

In its comprehensive analysis, Goldman Sachs assigned ‘Neutral’ ratings to several prominent lenders. This included State Bank of India (SBI), IndusInd Bank, and IDFC First Bank, reflecting specific risk-reward profiles and valuation assessments.

Neutral Stance for Public and Private Sector Players

• SBI received a ‘Neutral’ rating with a target of Rs 1,170, citing a balanced risk-reward profile.
• IndusInd Bank was given a ‘Neutral’ rating due to valuations considered fair.
• IDFC First Bank also secured a ‘Neutral’ rating, with its improving earnings trajectory already reflected in current valuations.

Conversely, Goldman Sachs adopted a cautious outlook on a selection of lenders, issuing ‘Sell’ ratings for both public and private sector entities based on specific operational and financial concerns.

‘Sell’ Ratings Highlight Caution on Specific Lenders

• PNB received a ‘Sell’ rating, with expectations of subsiding favorable tailwinds and ongoing concerns over weak core profitability.
• Bank of Baroda also earned a ‘Sell’ rating, facing pressure from an elevated loan-to-deposit ratio and a weak funding profile.
• RBL Bank was rated ‘Sell’ with a target of Rs 285, as the firm anticipates only a gradual turnaround.
• Yes Bank received a ‘Sell’ rating and a target of Rs 22, due to insufficient return on assets to justify its valuations.

This extensive initiation of coverage by Goldman Sachs provides a detailed snapshot of the Indian banking landscape, segmenting institutions by their potential profitability drivers and outlining specific valuation-based outlooks for investors.