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Axis Securities Report
Axis Securities noted that the credit growth has revived strongly (~15% YoY for the brokerage's coverage universe), led by small finance banks and public sector banks/mid-sized private banks, though geopolitical risks may weigh on momentum.
The brokerage has also highlighted that deposit growth continues to lag, keeping funding costs elevated and competition for current accout and savings account intense. Net interest margin trends are expected to remain divergent, with mid-sized banks and SFBs seeing NIM uptick, while large private banks and PSBs defend margins amid yield compression and sticky CoD.
On the NBFCs front, the brokerage expects strong growth momentum to persist led by diversified, vehicle, and gold financiers and earnings growth (driven by lower credit costs). However, rising oil prices, a potential rate cycle reversal, and continued geopolitical uncertainty could pose headwinds to lenders' demand and asset quality.
Axis Securities key result plays are as follows:
Positive result plays Banks: ICICI Bank, State Bank of India, Federal Bank, AU Small Finance Bank, Ujjivan Small Finance Bank
NBFCs: Cholamandalam Investment & Finance, CreditAccess Grameen, Bajaj Finance, Can Fin Homes.
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