Macquarie has released its latest report on the Indian financials sector, revising its outlook and ratings on several key stocks while maintaining an optimistic medium-term view on banking earnings.
The brokerage upgraded PB Fintech to Neutral from Underperform, raising its target price to Rs 1,945 per share. Meanwhile, IndusInd Bank was downgraded to Underperform from Outperform, with the target price slashed to Rs 650.
Kotak Mahindra Bank was also downgraded to Neutral, though its target price was raised to Rs 2,300, signaling more balanced risk-reward at current levels. Similarly, SBI Cards was downgraded to Neutral with the target price increased to Rs 1,040.
For the insurance segment, HDFC Life Insurance was downgraded to Underperform from Neutral, with the target price revised upward to Rs 720.
Macquarie stated that margin pressures across the sector are expected to be transient and forecasted a robust ~15% earnings CAGR for banks over the next three years. The brokerage expressed preference for large private sector banks, with a selective approach to NBFCs.
Its top picks in the financial space include HDFC Bank, Axis Bank, Aditya Birla Capital (ABCAP), Power Finance Corporation (PFC), Shriram Housing Finance (SHFL), and LIC.
The note highlighted that while short-term challenges remain, the structural story for Indian financials stays intact, driven by credit growth and improving asset quality trends.
