Description

We are assuming/initiating coverage of six mid-size Indian financials. Yes Bank, IDFC, J&K Bank and Union Bank are our favoured stocks and we rate them OUTPERFORM. We are also assuming coverage on Kotak Bank (NEUTRAL) and Indian Overseas Bank (UNDERWEIGHT). While relatively smaller in size, these companies have carved their individual niches within the Indian financial sector that allow them to be as, if not more, profitable than some of their larger peers and all of these banks generate ROAs of 1.2- 1.5%. Their relatively smaller size also does not necessarily burden these financials with a higher operating cost structure and with their cost-income ratios averaging at 42-45%, they
compare well with the larger banks.