Goldman Sachs has upgraded its stance on Indian financials, stating that the prolonged “muddle through” phase may be nearing its end. The brokerage sees early signs of improvement in asset quality and profitability (PPOP-ROAs), despite factoring in a 100bps rate cut.
Goldman now upgrades:
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PNB Housing to Buy, TP: ₹1,184 – on better visibility around loan growth and profitability.
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Axis Bank to Buy, TP: ₹1,228 – citing mean-reversion in valuation and improving growth visibility supported by potential liquidity infusions.
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SBI to Neutral (from Sell), TP: ₹823 – highlighting a fair risk-reward profile post derating from 1.1x to 0.9x 12-month forward price-to-book, in line with its 90bps ROA.
The brokerage expects credit growth to remain sluggish in the near term, with ongoing pressure on NIMs and credit costs. However, it believes consensus earnings downgrades could bottom out in 1HFY26, offering investors a better entry point in select names.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
