Goldman Sachs starts coverage on 14 banks with up to 37% upside potential; ICICI Bank, Kotak among top picks

Wall Street major Goldman Sachs has initiated coverage on 14 Indian banks with a mix of buy, neutral and sell ratings, identifying profitability and return on assets (ROA) normalisation as key drivers of stock performance.

The brokerage's framework focuses on earnings acceleration, franchise strength and valuations, while it sees private banks at an inflection point.

Big private lenders get Buy rating

Among large private banks, Goldman Sachs has a Buy rating on ICICI Bank, with a target price of Rs 1,935, implying a 37% upside. Kotak Bank is also rated Buy with a target price of Rs 509, indicating a potential upside of 31%.


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HDFC Bank has been assigned a Buy rating with a target price of Rs 861, implying an upside of 19%. Axis Bank has also received a Buy rating, with Goldman Sachs setting a target price of Rs 1,477, which represents an upside of 19%.

Mid-sized banks

Goldman Sachs has also turned positive on select mid-sized lenders. Federal Bank has been rated Buy with a target price of Rs 425, implying an upside of 19%. AU Small Finance Bank has also received a Buy rating, with a target price of Rs 1,270 and an upside of 18%.

The brokerage has a Neutral rating on IDFC First Bank, with a target price of Rs 92, implying an upside of 9%. Bandhan Bank has also been rated Neutral, with a target price of Rs 180 and an upside of 6%.

IndusInd Bank has received a Neutral rating with a target price of Rs 1,020, indicating no upside from the current level.

Goldman Sachs has assigned Sell ratings to RBL Bank and Yes Bank. RBL Bank has a target price of Rs 285, implying a downside of 26%, while Yes Bank has a target price of Rs 22, indicating a downside of 4%.

PSU banks

Among public sector banks, State Bank of India has been rated Neutral by Goldman Sachs, with a target price of Rs 1,170, implying an upside of 11%.

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Bank of Baroda has received a Sell rating with a target price of Rs 245, which indicates no upside. Punjab National Bank has also been rated Sell, with a target price of Rs 103, implying a downside of 12%.

Goldman Sachs' preferred picks from its coverage of Indian banks are ICICI Bank, Kotak Bank, AU Small Finance Bank and Federal Bank.

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