Sector Report

BFSI - Rating and Target Price

Banks Sectorial Credit Rating
Mkt
CMP TP Upside P/ABV (x)
Cap
Credit growth continued to show strong growth trajectory (In Bn) (Rs) (Rs) (%) FY23E FY24E
Summary Banks
HDFC Bank BUY 7,465 1,344 2,020 50 2.7 2.3
Credit growth continued to maintain its double digit growth trajectory in May
Axis Bank BUY 1,949 635 990 56 1.6 1.4
month; it stood at 12.6% YoY as compared to 11.3% YoY in April. Retail credit &
DCB Bank BUY 23 74 105 41 0.6 0.5
Services segment continued to support the credit growth. Retail credit witnessed
Federal Bank BUY 191 91 120 32 1.0 0.9
uptrend to 16.4% YoY (14.7% YoY in Apr’22). Service portfolio growth showed
ICICI Bank BUY 4,911 706 950 35 2.5 2.0
improvement in May month at 12.9% YoY (11.1% YoY in Apr’22). Overall, the Credit
IndusInd Bank BUY 613 790 1,300 64 1.1 1.0
growth improved due to growth in Credit Card Outstanding, Consumer Durables,
NBFCs
Housing Finance Company, Advances against Fixed Deposits as well as Micro and
Cholamandalam Inv. HOLD 511 622 720 16 4.3 3.6
Small Industries. Deposit growth saw marginal downtick of 1 bps on fortnight basis
Manappuram Fin. BUY 72 85 150 76 0.8 0.7
and stood at 9.27% (3rd June’22) vs. 9.28% (20th May’22). Among our banking
Muthoot Finance BUY 392 977 1,430 46 2.0 1.7
coverage universe, our top picks are HDFC bank (fast revival post normalcy), ICICI
HFCs
Bank (better to weather the storm), and Federal bank (better among midcap banks).
HDFC BUY 3,903 2,151 3,140 46 3.2 2.9
 Retail credit growth improved: Retail growth improved in May’22 and stood at Repco Home Finance BUY 8 131 210 60 0.4 0.4
16.4% vs 14.7% YoY in Apr’22. Within retail, Credit Card portfolio stood at 30.1% Source: Company; IDBI Capital Research
YoY vs 20% YoY in Apr’22, Consumer durable portfolio stood at 72.4% YoY vs 64.9%
YoY in Apr’22,Vehicle Loan growth continued to witness uptrend an stood at 14.1%
YoY vs 11.5% YoY in Apr’22. Education Credit portfolio slowed down marginally and
stood at 6.1% YoY vs 6.2% YoY in Apr’22 while Loans against gold jewelry growth
stood stable at -2.9% YoY in May’22 (vs -2.9% YoY in Apr’22).
 Strong Industry and improved service credit growth: Industry credit growth stood
at 8.7% YoY vs 8.1% YoY in Apr'22. Growth was observed in Micro & Small industry,
which stood at 33% vs 29% YoY. Medium industry witnessed downtrend and stood
at 49.3% YoY (vs 53.5% YoY in Apr'22). Large industry growth improved marginally
and stood at 1.9% vs growth of 1.6% YoY in Apr'22. Service credit growth showed
uptick and stood at 12.9% vs 11.1% YoY in Apr'22.
July 1, 2022
Banks Sectorial Credit | Sector Report

Exhibit 1: in Non-food Credit showed uptick while Deposits continued to grow strong in May’22.
16.0
12.1 11.4 12.6
13.0 10.3 10.1 11.0 10.9 10.6 11.3 10.3 10.3 10.3
9.7 9.0 9.8 9.5
10.0
6.6 9.28
7.0 9.8 9.3
8.3 5.2
7.3 4.5
7.0 6.7 6.6 6.7 6.9
4.0 6.0 5.5 5.9
1.0

Jun-20

Jun-21
Oct-19

Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21

Mar-22
Apr-22
Jan-20

Jan-21

Jan-22
Jul-19

Jul-20

Jul-21
Aug-19

Aug-20

Aug-21
Sep-21
Sep-19

Dec-19
Nov-19

Feb-20

May-20

Sep-20

Dec-20

May-21

Dec-21
Nov-20

Feb-21

Nov-21

Feb-22

May-22
Non-food Credit Deposit
Source: RBI; IDBI Capital Research; Note- Deposit growth is on fortnight basis

Exhibit 2: MCLR rate could move up as interest rates rise

9.0 8.3 8.4 8.5 8.6 8.8 8.8 8.8 8.5 8.4 8.3 8.2
8.0 7.7
7.5 7.3 7.3 7.2 7.3 7.2 7.3 7.4
6.5 6.5
7.0 6.0 6.0 6.3 6.3 6.0
5.8 5.4
5.2 5.2 4.9
5.0 4.4 4.4
4.0 4.0

3.0
Aug-18

Aug-19

Aug-20

Aug-21
Jan-18

Apr-18

Jul-18

Oct-18

Apr-19

Jul-19

Oct-19

Apr-20

Apr-21

Apr-22
Jul-20

Oct-20

Jul-21

Oct-21
Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Jun-22
Jun-18

Jan-19

Jun-19

Jan-20

Jun-20

Jan-21

Jun-21

Jan-22
May-18

Dec-18

May-19

Dec-19

May-20

Dec-20

May-21

Dec-21

May-22
Feb-18

Sep-18
Nov-18

Feb-19

Sep-19
Nov-19

Feb-20

Sep-20
Nov-20

Feb-21

Sep-21
Nov-21

Feb-22
1 Year MCLR (SCB's) Repo Rate
Source: RBI; IDBI Capital Research

2
Banks Sectorial Credit | Sector Report

Exhibit 3: Sector Credit (Rs bn)

Sectors May-22 May-21 April-22 YoY (%) MoM (%)

Non-Food Credit 1,19,741 1,06,366 1,19,121 12.6 0.5
Agriculture and Allied activities 14,836 13,267 14,786 11.8 0.3
Industry (MSME) 31,649 29,106 31,524 8.7 0.4
Micro & Small 5,516 4,148 5,451 33.0 1.2
Medium 2,184 1,463 2,181 49.3 0.2
Large 23,949 23,495 23,892 1.9 0.2
Services 30,432 26,957 30,188 12.9 0.8
Transport Operators 1,521 1,418 1,525 7.2 (0.3)
Computer Software 192 193 202 (0.1) (5.0)
Tourism, Hotels & Restaurants 644 591 649 8.9 (0.9)
Shipping 76 57 79 33.2 (3.8)
Aviation 224 276 231 (19.0) (3.0)
Professional Services 1,191 1,099 1,174 8.5 1.5
Trade 7,145 6,299 7,073 13.4 1.0
Wholesale Trade 3,771 3,258 3,746 15.7 0.7
Retail Trade 3,375 3,041 3,327 11.0 1.4
Commercial Real Estate 3,008 2,903 2,961 3.6 1.6
NBFCs 10,958 9,088 10,912 20.6 0.4
Housing Finance Companies 2,890 2,559 2,881 12.9 0.3
Public Financial Institutions 1,426 803 1,428 77.5 (0.2)
Other Services 5,473 5,032 5,381 8.8 1.7
Personal Loans 34,678 29,796 34,430 16.4 0.7
Consumer Durables 296 172 289 72.4 2.4
Housing 17,089 15,029 17,063 13.7 0.2
Advances against FDs 779 666 798 17.0 (2.3)
Advances to Individuals 62 53 61 17.2 1.0
Credit Card Outstanding 1,541 1,185 1,537 30.1 0.3
Education 827 779 826 6.1 0.1
Vehicle Loans 4,184 3,666 4,135 14.1 1.2
Loans against Gold Jewellery 738 760 743 (2.9) (0.7)
Other Personal Loans 9,163 7,486 8,978 22.4 2.1

3
Banks Sectorial Credit | Sector Report

Sectors (Contd…) May-22 May-21 April-22 YoY (%) MoM (%)

Priority Sector
Agriculture & Allied Activities 14,580 13,076 15,291 11.5 (4.7)
Micro & Small Enterprises 14,240 11,209 14,089 27.0 1.1
Medium Enterprises 3,572 2,168 3,547 64.8 0.7
Housing 6,142 5,867 6,102 4.7 0.7
Education Loans 579 591 578 (2.0) 0.3
Weaker Sections 11,658 9,892 12,126 17.9 (3.9)
Export Credit 208 214 211 (3.0) (1.6)
Renewable Energy 40 18 36 117.3 12.4
Social Infrastructure 25 30 25 (15.8) 1.3
Others 461 143 437 222.5 5.5
Source: RBI; IDBI Capital Research

4
Banks Sectorial Credit | Sector Report

Exhibit 4: Industry Credit (Rs bn)

Sectors May-22 May-21 April-22 YoY (%) MoM (%)

Mining & Quarrying (incl. Coal) 470 434 475 8.2 (1.0)
Food Processing 1,751 1,567 1,754 11.7 (0.2)
Sugar 256 251 265 1.9 (3.7)
Edible Oils & Vanaspati 177 172 175 3.0 1.6
Tea 61 51 59 19.4 2.5
Others 1,257 1,093 1,255 15.0 0.1
Beverage & Tobacco 178 173 180 2.6 (1.4)
Textiles 2,195 2,089 2,229 5.1 (1.5)
Cotton Textiles 877 852 892 2.9 (1.7)
Jute Textiles 36 25 35 42.6 1.2
Man-Made Textiles 384 359 383 7.0 0.3
Other Textiles 898 853 919 5.3 (2.2)
Leather & Leather Products 114 109 113 5.0 1.0
Wood & Wood Products 165 152 163 8.4 1.4
Paper & Paper Products 404 383 402 5.5 0.4
Petroleum, Coal Products & Nuclear Fuels 1,047 845 1,036 23.9 1.0
Chemicals & Chemical Products 2,088 1,806 2,043 15.6 2.2
Fertiliser 378 318 346 18.8 9.4
Drugs & Pharmaceuticals 627 533 634 17.5 (1.1)
Petro Chemicals 216 256 212 (15.8) 1.7
Others 868 698 852 24.2 1.9
Rubber, Plastic & their Products 713 574 716 24.2 (0.5)
Glass & Glassware 58 61 58 (5.4) (0.5)
Cement & Cement Products 478 539 468 (11.4) 2.2
Basic Metal & Metal Product 2,921 2,989 2,872 (2.3) 1.7
Iron & Steel 1,878 2,052 1,850 (8.5) 1.5
Other Metal & Metal Product 1,043 937 1,022 11.2 2.0

5
Banks Sectorial Credit | Sector Report

Sectors (Contd…) May-22 May-21 April-22 YoY (%) MoM (%)

All Engineering 1,686 1,546 1,665 9.0 1.3
Electronics 384 367 388 4.6 (1.0)
Others 1,302 1,179 1,277 10.4 1.9
Vehicles, Vehicle Parts & Transport Equipment 912 837 901 9.0 1.3
Gems & Jewellery 720 684 778 5.3 (7.5)
Construction 1,142 1,221 1,125 (6.5) 1.6
Infrastructure 11,988 10,944 12,028 9.5 (0.3)
Power 6,145 5,633 6,128 9.1 0.3
Telecommunications 1,294 1,146 1,307 12.9 (1.0)
Roads 2,753 2,343 2,738 17.5 0.6
Airports 68 97 85 (29.3) (19.4)
Ports 79 111 91 (28.3) (12.9)
Railways (other than Indian Railways 114 125 115 (9.1) (0.9)
Other Infrastructure 1,535 1,490 1,565 3.0 (1.9)
Other industries 2,621 2,152 2,518 21.8 4.1
Industries 31,649 29,106 31,524 8.7 0.4
Source: RBI; IDBI Capital Research

Exhibit 5: Bank group wise MCLR (1 year)

Public sector Banks Private sector Banks Foreign Banks SCBs
Months Min Max Median Min Max Median Min Max Median Min Max Median
Dec-21 7.00 7.45 7.25 7.20 9.30 8.20 3.87 9.75 5.80 3.87 9.75 7.25
Jan-2022 7.00 7.45 7.25 7.20 9.30 8.15 3.58 9.75 6.05 3.58 9.75 7.25
Feb-2022 7.00 7.45 7.25 7.20 9.30 8.22 3.75 9.75 6.05 3.75 9.75 7.20
Mar-2022 7.00 7.45 7.25 7.25 9.30 8.35 3.75 9.75 6.17 3.75 9.75 7.25
Apr-2022 7.10 7.45 7.25 7.25 9.30 8.33 4.05 9.75 6.10 4.05 9.75 7.25
May-2022 7.20 7.50 7.35 7.25 9.30 8.35 2.39 8.75 6.05 2.39 9.30 7.25
June-2022 7.35 7.70 7.43 7.40 9.55 8.35 2.87 8.95 6.60 2.87 9.55 7.40
Source: RBI; IDBI Capital Research

6
Banks Sectorial Credit | Sector Report

Exhibit 6: Retail, Industrial and Service sector continued to witness positive growth trajectory
20.0

15.0

10.0

5.0

Jun-20

Jun-21
Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21

Mar-22
Apr-22
Jan-20

Jan-21

Jan-22
Jul-20

Jul-21
Aug-20

Dec-20

Aug-21
Feb-20

May-20

Sep-20

Nov-20

Feb-21

May-21

Sep-21

Dec-21
Nov-21

Feb-22

May-22
-5.0

Non-food Credit Agriculture Industry Services Personal Loans

Source: RBI; IDBI Capital Research

Exhibit 7: Consumer Durable as well as Credit Card Outstanding continued to witnessed strong traction in
May’22
35.0

25.0

15.0

5.0
Mar-20

Mar-21

Mar-22
Apr-20

Oct-20

Apr-21

Oct-21

Apr-22
Jul-20

Jul-21
Jan-20

Jun-20

Aug-20

Jan-21

Jun-21

Aug-21

Jan-22
May-20

Dec-20

May-21

Dec-21

May-22
Feb-20

Sep-20

Nov-20

Feb-21

Sep-21

Nov-21

Feb-22
-5.0

Housing Credit card Vehicle Loans Other Personal Loans

Source: RBI; IDBI Capital Research

7
Banks Sectorial Credit | Sector Report

Exhibit 8: Trade and NBFC segment posted higher than double digit growth along with moderate growth
in Transport operator,Tourism,Hotels & Restaurants as well as Commercial Real Estate.
60.0

40.0

20.0

0.0

Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21

Mar-22
Apr-22
Jul-20

Jul-21
Jan-20

Jun-20

Aug-20

Jan-21

Jun-21

Aug-21

Jan-22
May-20

Dec-20

May-21

Dec-21

May-22
Feb-20

Sep-20

Nov-20

Feb-21

Sep-21

Nov-21

Feb-22
-20.0
Transport Operators Tourism, Hotels & Restaurants Trade
Commercial Real Estate NBFCs
Source: RBI; IDBI Capital Research

Exhibit 9: Vehicle Credit continued to showed healthy growth momentum in May’22

30.0
20.0
10.0
0.0

Jun-20

Jun-21
Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21
Aug-21

Mar-22
Apr-22
Jan-20

Jan-21

Jan-22
Jul-20

Jul-21
Aug-20
Sep-20
Feb-20

May-20

Dec-20

May-21

Dec-21
Nov-20

Feb-21

Sep-21

Nov-21

Feb-22

May-22
-10.0
-20.0
-30.0
Construction Infrastructure Textile Vehicle Cement Gems and Jewellery

Source: RBI; IDBI Capital Research

8
Banks Sectorial Credit | Sector Report

Exhibit 10: Market Share within the Banking Sector

5.4% 5.3% 5.4% 5.3% 5.2% 4.9% 4.8% 5.1% 5.2% 5.1%
100.0%

35.3%
35.9%
36.0%

35.4%

35.7%
36.5%
36.6%
37.5%
37.7%
38.1%
80.0%
60.0%
40.0%

59.6%

59.4%
59.2%

59.1%
59.1%
58.3%
58.1%
57.1%
56.9%
56.6%
20.0%
0.0%
Q4FY22 Q3FY22 Q2FY22 Q1FY22 Q4FY21 Q3FY21 Q2FY21 Q1FY21 Q4FY20 Q3FY20
PSU PVT Others

Source: RBI; IDBI Capital Research; Note- Deposit growth is on fortnight basis

The market share for the private sector Banks have been steadily increasing over the quarters as seen in the
illustration. We believe as there has been a consolidation of Public Sector Banks and the Private peers
continue to outperform with respect to credit growth along with rigorous focus on the asset quality.

9
 Banks Sectorial Credit | Sector Report

4.0
6.0
8.0
12.0

10.0

2.00
4.00
6.00
8.00
Jan-15 10.00 Jan-16
Mar-15 May-16
May-15 Sep-16
Jul-15 Jan-17
Sep-15 May-17
Nov-15 Sep-17
PSBs

Jan-18

Source: RBI; IDBI Capital Research

Source: RBI; IDBI Capital Research

Jan-16
Mar-16 May-18
May-16 Sep-18
Jul-16 Jan-19
May-19
PVBs

Sep-16
Nov-16 Sep-19
Jan-17 Jan-20
Mar-17 May-20
May-17 Sep-20
FBs

Jul-17 Jan-21
(WALR) (On Fresh Rupee Loans Sanctioned)

May-21
Exhibit 11: Weighted Average Lending Rates

Sep-17
Nov-17 Sep-21
PSBs

Jan-18 Jan-2022
Mar-18 May-22
May-18
Jul-18
Sep-18
Nov-18
PVBs
10.00
12.00
14.00

4.00
8.00
6.00

Jan-19
Mar-19 Jan-16
May-19 May-16
Jul-19 Sep-16
Sep-19 Jan-17
FBs

Nov-19 May-17
Jan-20 Sep-17
PSBs

Source: RBI; IDBI Capital Research

Mar-20 Jan-18
May-20 May-18
July-20 Sep-18
Sep-20 Jan-19
May-19
PVBs

Nov-20
Jan-21 Sep-19
Mar-21 Jan-20
May-21 May-20
(WALR) (On Outstanding Rupee Loans)

Sep-20
FBs

July-21
Sep-21 Jan-21
Exhibit 12: Weighted Average Lending Rates

Nov-21 May-21
Jan-22 Sep-21
Mar-22 Jan-22
Exhibit 13: Weighted Average Domestic Term Deposit Rates (WADTDR) (Outstanding Rupee Term Deposits)

May-22 May-22
10
Banks Sectorial Credit | Sector Report

Exhibit 14: NBFC AAA yields- from Jan’21 onwards 5yrs yield seen hardening by 201 bps and 10yrs yield of 116 bps

11.50
10.50
9.50
8.50
7.50
6.50
5.50
4.50
3.50

Mar-14

Mar-19
Oct-14

Apr-20

Oct-20
Jun-16

Jul-17
Aug-12

Jan-18

Aug-18

Jun-22
Sep-13

May-15

Dec-16

May-21
Feb-13

Nov-15

Sep-19

Nov-21
NBFC AAA 2 yrs yield NBFC AAA 3 yrs yield NBFC AAA 5 yrs yield NBFC AAA 10 yrs yield
Source: Bloomberg; IDBI Capital Research

Exhibit 15: NBFC AA yields- from Jan’21 onwards 5yrs yield seen hardening by 183 bps and 10yrs yield of 112 bps

11.50
10.00
8.50
7.00
5.50
4.00
Mar-13

Oct-13

Mar-17

Oct-17

Apr-21
Jul-19
Aug-12

Jun-15

Jan-16

Aug-16

Jun-22
May-14

May-18

Dec-18
Nov-14

Feb-20

Sep-20

Nov-21
NBFC AA 3 yrs yield NBFC AA 5 yrs yield NBFC AA 10 yrs yield
Source: Bloomberg; IDBI Capital Research

11
Banks Sectorial Credit | Sector Report

Exhibit 16: Corporate bond AAA yields- from Jan’21 onwards 5yrs yield hardens by 205 bps and 10yrs yield
by 119 bps
14.50
12.50
10.50
8.50
6.50
4.50
2.50

Oct-20

Oct-21
Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Jun-21

Jun-22
May-16

May-17

May-18

May-19

Sep-19

May-20
Sep-16

Sep-17

Sep-18

Feb-21

Feb-22
1 yr AAA Corp yield 5 yrs AAA Corp yield 10 yrs AAA Corp yield
Source: Bloomberg; IDBI Capital Research

Exhibit 17: Corporate bond AA yields- from Jan’21 onwards 5yrs yield soften by 199 bps and 10yrs yield by
114 bps
12.00
11.00
10.00
9.00
8.00
7.00
6.00
Sep-16

Sep-17

Sep-18

Sep-19

Feb-21

Jun-21

Feb-22

Jun-22
Oct-20

Oct-21
Jan-16

Jan-17

Jan-18

Jan-19

Jan-20
May-16

May-17

May-18

May-19

May-20
3 yrs AA Corp yield 5 yrs AA Corp yield 10 yrs AA Corp yield
Source: Bloomberg; IDBI Capital Research

12
Banks Sectorial Credit | Sector Report

Exhibit 18: Corporate bond A yields- from Jan’21 onwards 5yrs yield surge by 212 bps and 10yrs yield by
39 bps.
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00

Jan-16

Jan-17

Jan-18

Jan-19

Jan-20

Oct-20

Oct-21
Jun-21

Jun-22
May-16

May-17

May-18

May-19

Sep-19

May-20
Sep-16

Sep-17

Sep-18

Feb-21

Feb-22
1 yr A Corp yield 5 yrs A Corp yield 10 yrs A Corp yield
Source: Bloomberg; IDBI Capital Research

Exhibit 19: Corporate bond BBB yields- from Jan’21 onwards 5yrs yield surge by 145 bps.
14.50
13.50
12.50
11.50
10.50
9.50
8.50
7.50
6.50
Nov-06

Nov-11

Nov-16

Nov-21
Mar-05
Sep-05
Apr-06

Mar-10
Oct-10
Apr-11

Mar-15
Oct-15
Apr-16

Feb-19

Mar-20
Oct-20
Apr-21
Jan-09

Jan-14
Jul-08

Jul-13

Jul-18
Aug-04

Jun-07

Aug-09

Jun-12

Aug-14

Jun-17

Aug-19

Jun-22
Dec-07

Dec-12

Dec-17
1 yr BBB Corp 5 yrs BBB Corp
Source: Bloomberg; IDBI Capital Research

13
Banks Sectorial Credit | Sector Report

Exhibit 20: G-sec yield- from Jan’21 onwards 10yrs yield hardens by 123bps
10.00
9.00
8.00
7.00
6.00
5.00
4.00

Mar-06

Mar-09

Apr-14

Oct-15

Apr-17

Mar-20
Jan-15

Jan-18
Jul-16
Jun-05

Jun-08

Aug-10

Aug-13

Jun-19

Jun-22
Dec-06

May-11

Dec-20
Sep-07

Nov-09

Feb-12
Nov-12

Sep-18

Sep-21
Gsec 3 yrs yield (%) Gsec 5 yrs yield (%) Gsec 10 yrs yield (%)
Source: Bloomberg; IDBI Capital Research

Exhibit 21: Spread between G-Sec and 5 Year AAA Corp yield
12.00
10.00
8.00
6.00
4.00
2.00
0.00

Aug-11

Aug-18
Apr-06

Oct-07
Jul-08

Dec-13

Apr-16
Jul-15

Dec-20
Mar-13
Jun-05

Jan-07

Jun-12

Jan-17

Jun-22
May-09

Sep-14

May-19
Feb-10
Nov-10

Nov-17

Feb-20

Sep-21
Gsec 5 yrs yield (%) 5 Year AAA Corp yield Spread between G-Sec and 5 Year AAA Corp yield
Source: Bloomberg; IDBI Capital Research

14
Banks Sectorial Credit | Sector Report

Exhibit 22: Spread between G-Sec and 5 Year AA Corp yield

12.00
10.00
8.00
6.00
4.00
2.00
0.00
25-May-05 31-Mar-08 3-Feb-11 10-Dec-13 14-Oct-16 21-Aug-19 27-Jun-22
Gsec 5 yrs yield (%) 5 Year AA Corp yield Spread between G-Sec and 5 Year AA Corp yield
Source: Bloomberg; IDBI Capital Research

Exhibit 23: Spread between G-Sec and 10 Year AAA Corp yield
12.00
10.00
8.00
6.00
4.00
2.00
0.00
Mar-06

Apr-09

Oct-10
Aug-11

Mar-16

Oct-17
Jul-18
Jun-08

Jan-10

Jun-15

Jan-17
May-05

Dec-06

May-12

Dec-13

May-19

Jun-22
Sep-07

Feb-13

Sep-14

Feb-20
Nov-20
Sep-21
10 Year AAA Corp yield Gsec 10 yrs yield (%) Spread between G-Sec and 10 Year AAA Corp yield
Source: Bloomberg; IDBI Capital Research

15
Banks Sectorial Credit | Sector Report

Exhibit 24: Spread between G-Sec and 10 Year AA Corp yield

12
10
8
6
4
2
0

Oct-17
Mar-06

Apr-09

Oct-10

Mar-16

Jul-18
Jun-08

Jan-10

Aug-11

Jun-15

Jan-17

Jun-22
May-05

Dec-06

May-12

Dec-13

May-19
Sep-07

Feb-13

Sep-14

Feb-20
Nov-20
Sep-21
10 Year AA Corp yield Gsec 10 yrs yield (%) Spread between G-Sec and 10 Year AA Corp yield
Source: Bloomberg; IDBI Capital Research

16
Banks Sectorial Credit | Sector Report

Exhibit 25: Corporate bond Raised by NBFCs on MoM basis

NBFCs (Rs in Bn) Jun-21 July-21 Aug-21 Sept-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22

HDFC 20.0 - - 115.0 20.0 30.0 125.0 - 20.0 100.0 - 77.4 30.0

LIC HF 3.2 - - 39.8 6.8 27.0 24.0 - 23.6 23.8 - - 10.0

PNB HF 1.3 - - 3.3 3.3 - - - - - - - -

Shriram Transport 18.3 - - 1.5 - 21.0 2.8 70.8 17.8 17.8 8.0 - -

Cholafin 0.4 3.3 4.0 2.8 2.0 - 10.0 - 8.5 4.0 9.8 4.0 5.0

Sundaram Finance 2.5 5.0 - 8.0 - 10.0 - - - - 5.0 - 4.0

Shriram City Union 1.0 1.5 2.6 10.4 - 3.0 6.0 - 6.2 - - 6.5 -
Muthoot Finance - - 4.0 - - - - - 7.0 7.0 - 3.8 2.7
Manappuram Finance - - - - - - 5.0 5.0 - - - - -

Bajaj Finance - - 8.5 - - - 9.3 - 49.2 49.2 - - 22.5

M&M Financial 8.3 15.8 - - - 3.8 - 3.0 8.0 - - - -

Piramal Enterprise 3.7 1.0 - 4.0 - - - - - 4.8 - 2.0 -

L&T Finance - - 5.0 0.8 - 2.2 4.5 - 5.7 - - - -

Indiabulls Housing - - - 50.2 - - 10.0 15.5 - - 160.0 - -
Source: Bloomberg; IDBI Capital Research

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Banks Sectorial Credit | Sector Report

Exhibit 26: Valuation Metric of Coverage Universe

Market
CMP TP NII (Rs bn) Op Pft (Rs bn) PAT (Rs bn) EPS (Rs) ABVPS (Rs) PER (x) P/ABV (x) ROA (%) ROE (%)
Cap
(Rs Bn) (Rs) (Rs) Reco FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E FY23E FY24E
Banks
Axis Bank 1,949 635 990 BUY 366 405 304 333 163 173 53 56 408 462 12.0 11.3 1.6 1.4 1.3 1.3 13.3 12.5
DCB Bank 23 74 105 BUY 15 17 8 9 4 4 11 14 125 135 6.6 5.4 0.6 0.5 0.8 0.9 8.4 9.4
Federal Bank 191 91 120 BUY 67 74 44 51 26 29 13 14 92 103 7.3 6.5 1.0 0.9 1.1 1.1 13.3 13.3
HDFC Bank 7,465 1344 2,020 BUY 844 1,005 749 897 436 523 79 94 495 573 17.1 14.3 2.7 2.3 1.9 2.0 16.8 17.4
IndusInd Bank 613 790 1,300 BUY 170 195 136 159 71 82 92 106 693 795 8.6 7.5 1.1 1.0 1.7 1.7 13.8 13.8
ICICI Bank 4,911 706 950 BUY 538 634 447 540 270 317 39 46 277 352 18.2 15.4 2.5 2.0 1.8 1.9 14.3 13.9
Housing Finance
HDFC 3,903 2151 3,140 BUY 199 222 221 248 145 175 80 97 679 745 26.9 22.3 3.2 2.9 2.1 2.2 11.6 12.8
Repco Home Fin 8 131 210 BUY 5 5 4 4 2 2 30 37 308 347 4.4 3.6 0.4 0.4 1.5 1.7 7.9 9.1
Gold Finance
Manappuram Fin 72 85 150 BUY 40 45 22 26 13 16 15 19 107 122 5.6 4.4 0.8 0.7 3.7 4.2 14.6 16.2
Muthoot Fin 392 977 1,430 BUY 74 81 54 59 39 42 98 106 483 576 10.0 9.3 2.0 1.7 5.3 5.3 20.2 19.1
Vehicle Finance
Cholafin 511 622 720 HOLD 58 67 40 48 25 30 31 36 144 174 20.2 17.1 4.3 3.6 2.9 2.9 19.8 19.5

Source: Bloomberg; IDBI Capital Research

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Banks Sectorial Credit | Sector Report

Notes

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Banks Sectorial Credit | Sector Report

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