Sector Report

BFSI - Rating and Target Price

Banks Sectorial Credit Rating
Mkt
CMP TP Upside P/ABV (x)
Cap
Banking Credit growth at historical highs (In Bn) (Rs) (Rs) (%) FY23E FY24E
Summary Banks
HDFC Bank BUY 8,970 1,609 1,860 16 3.2 2.8
Credit growth continued its strong growth momentum in Oct month; it stood at its
Axis Bank BUY 2,771 902 1,120 8 2.1 1.9
historical high levels of 18.3% YoY as compared to 16.9% YoY in Sept. Services and
DCB Bank BUY 41 131 140 7 1.0 0.9
Industry credit continued to lead the credit growth in Oct’22 followed by support
Federal Bank BUY 278 131 151 15 1.4 1.2
from Retail credit growth. Service credit continued to witness uptrend and stood at
ICICI Bank BUY 6,649 953 1,050 10 3.4 2.7
22.5% YoY (20.0% YoY in Sept’22). Industry portfolio growth too witnessed uptick in
IndusInd Bank BUY 905 1,167 1,450 24 1.7 1.5
Oct month at 13.6% YoY (12.6% YoY in Sept’22). Overall, the credit growth
City Union Bank BUY 140 189 230 22 2.1 1.8
continued to scale newer heights and the same is expected to continue in near
NBFCs
future led by corporate credit demand. Deposit growth saw downtick of 124 bps on
Cholamandalam Inv. BUY 589 717 840 17 4.9 4.0
fortnight basis and stood at 8.3% (4th Nov’22) vs. 9.5% (21st Oct’22). Among our
Manappuram Fin. BUY 97 115 140 22 1.1 1.0
banking coverage universe, our top picks are HDFC bank (fast revival post normalcy),
Muthoot Finance HOLD 434 1,081 1,250 16 2.3 1.9
ICICI Bank (better to weather the storm), Federal bank (better among midcap banks)
HFCs
and City Union Bank (consistent performer).
HDFC BUY 4,904 2,692 2,950 10 4.0 3.7
 Retail credit growth remained strong at 20.2%: Retail credit growth remained Repco Home Finance BUY 15 246 300 22 0.8 0.7
strong in Oct’22 and stood at 20.2% vs 19.6% YoY in Sept’22. Within retail, Source: Company; IDBI Capital Research
advances against FD (43.4% YoY vs 34.0% YoY in Sept’22), advances against gold
(15.5% YoY vs 11.8% YoY in Sept’22) and Vehicle loan (22.1% YoY vs 19.9% YoY in
Sept’22) witnessed uptick while credit growth in consumer durable continued
witnessing downtick for few consecutive months.
 Service and industry credit growth leading the credit growth story: Growth in
Service credit portfolio was led by growth in credit to Shipping (up by 14.7% YoY),
advances to NBFC’s (up by 38.0% YoY) and Professional Services (up by 14.6%
YoY). Within the industry credit portfolio, large industry portfolio witnessed uptick
(10.9% in Oct’22 vs. 7.9% in Sept’22) while Micro segment credit growth slowed
down and stood at 20.4% vs. 27.1% respectively in Sept’22.
December 1, 2022
Banks Sectorial Credit | Sector Report

Exhibit 1: Non-food Credit growth continued to scale newer heights in Oct’22

22.0
19.0
16.0 18.3
11.0 10.9 10.6 11.3 12.1 10.3 10.3 11.4 10.3
13.0 9.7 10.3 10.1 9.0 9.8 9.5
10.0 8.3
6.6
7.0 9.8 5.2 4.5 9.3
8.3
4.0 7.0 7.3 6.7 6.0 5.5 6.6 6.7 6.9
1.0 4.9

Jun-20

Jun-21

Jun-22
Oct-19

Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21

Mar-22
Apr-22

Oct-22
Jan-20

Jan-21

Jan-22
Jul-19

Jul-20

Jul-21

Jul-22
Aug-19
Sep-19

Aug-20

Aug-21

Aug-22
Dec-19

May-20

May-21
Nov-19

Feb-20

Sep-20

Dec-20
Nov-20

Feb-21

Sep-21

Dec-21
Nov-21

Feb-22

May-22

Sep-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 8.1
7.5 7.3 7.3 7.2 7.3 7.2 7.3 7.6
6.5 6.5 6.3
7.0 6.0 6.0 6.3 6.0 5.8 5.9
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

Aug-22
Apr-18

Apr-19

Oct-19

Apr-20

Apr-21
Jul-18

Oct-18

Jul-19

Jul-20

Oct-20

Jul-21

Oct-21

Apr-22
Mar-22

Jul-22

Oct-22
Mar-18

Mar-19

Mar-20

Mar-21

Jun-21
Jan-18

Jun-18

Jan-19

Jun-19

Jan-20

Jun-20

Dec-20
Jan-21

Jan-22

Jun-22
May-18

Dec-18

May-19

Dec-19

May-20

Sep-20

May-21

Dec-21
Feb-22

May-22

Nov-22
Feb-18

Sep-18
Nov-18

Feb-19

Sep-19
Nov-19

Feb-20

Nov-20

Feb-21

Sep-21
Nov-21

Sep-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 Oct-22 Oct-21 Sept-22 YoY (%) MoM (%)

Non-Food Credit 1,28,635 1,09,809 1,26,083 18.3 2.0
Agriculture and Allied activities 15,901 14,000 15,615 13.6 1.8
Industry (MSME) 32,906 28,974 32,408 13.6 1.5
Micro & Small 5,520 4,583 5,730 20.4 (3.7)
Medium 2,211 1,688 2,251 31.0 (1.8)
Large 25,176 22,704 24,428 10.9 3.1
Services 33,214 27,121 32,222 22.5 3.1
Transport Operators 1,608 1,420 1,578 13.3 1.9
Computer Software 223 209 215 6.8 3.8
Tourism, Hotels & Restaurants 638 606 661 5.2 (3.5)
Shipping 87 76 72 14.7 19.9
Aviation 240 291 234 (17.7) 2.3
Professional Services 1,245 1,087 1,206 14.6 3.3
Trade 7,466 6,380 7,457 17.0 0.1
Wholesale Trade 3,724 3,265 3,777 14.0 (1.4)
Retail Trade 3,742 3,115 3,680 20.2 1.7
Commercial Real Estate 3,051 2,768 2,977 10.2 2.5
NBFCs 12,557 9,103 11,717 38.0 7.2
Housing Finance Companies 3,054 2,539 3,029 20.3 0.8
Public Financial Institutions 1,685 907 1,528 85.7 10.3
Other Services 6,098 5,182 6,105 17.7 (0.1)
Personal Loans 37,703 31,367 37,020 20.2 1.8
Consumer Durables 347 221 335 57.1 3.6
Housing 18,259 15,717 18,058 16.2 1.1
Advances against FDs 983 685 963 43.4 2.0
Advances to Individuals 68 58 66 18.2 2.6
Credit Card Outstanding 1,792 1,395 1,672 28.4 7.2
Education 904 805 895 12.3 1.0
Vehicle Loans 4,614 3,779 4,495 22.1 2.6
Loans against Gold Jewellery 836 724 806 15.5 3.7
Other Personal Loans 9,900 7,983 9,729 24.0 1.8

3
Banks Sectorial Credit | Sector Report

Sectors (Contd…) Oct-22 Oct-21 Sept-22 YoY (%) MoM (%)

Priority Sector
Agriculture & Allied Activities 16,234 14,125 16,013 14.9 1.4
Micro & Small Enterprises 14,304 12,341 14,839 15.9 (3.6)
Medium Enterprises 3,695 2,618 3,720 41.1 (0.7)
Housing 6,317 5,791 6,255 9.1 1.0
Education Loans 594 595 589 (0.1) 0.9
Weaker Sections 13,377 10,464 13,175 27.8 1.5
Export Credit 169 226 156 (25.1) 8.6
Renewable Energy 42 21 38 102.1 11.8
Social Infrastructure 24 28 24 (13.6) (0.4)
Others 440 383 463 14.8 (5.0)
Source: RBI; IDBI Capital Research

4
Banks Sectorial Credit | Sector Report

Exhibit 4: Industry Credit (Rs bn)

Sectors Oct-22 Oct-21 Sept-22 YoY (%) MoM (%)

Mining & Quarrying (incl. Coal) 519 468 502 10.8 3.4
Food Processing 1,576 1,475 1,601 6.9 (1.5)
Sugar 179 182 190 (1.5) (5.7)
Edible Oils & Vanaspati 156 165 159 (5.3) (2.1)
Tea 61 59 61 3.7 0.2
Others 1,180 1,069 1,191 10.4 (0.9)
Beverage & Tobacco 194 167 178 16.4 9.2
Textiles 2,132 2,043 2,134 4.4 (0.1)
Cotton Textiles 818 803 813 1.9 0.6
Jute Textiles 37 26 37 41.5 (0.6)
Man-Made Textiles 392 376 389 4.3 0.7
Other Textiles 885 838 895 5.7 (1.0)
Leather & Leather Products 116 109 116 6.1 0.0
Wood & Wood Products 176 154 174 14.4 0.8
Paper & Paper Products 420 390 414 7.7 1.3
Petroleum, Coal Products & Nuclear Fuels 1,580 866 1,515 82.4 4.3
Chemicals & Chemical Products 2,225 1,778 2,151 25.1 3.4
Fertiliser 370 281 369 31.5 0.4
Drugs & Pharmaceuticals 667 546 642 22.1 3.9
Petro Chemicals 220 222 219 (1.1) 0.6
Others 968 728 922 32.9 4.9
Rubber, Plastic & their Products 765 642 755 19.2 1.4
Glass & Glassware 65 59 65 10.2 0.7
Cement & Cement Products 516 478 503 7.9 2.5
Basic Metal & Metal Product 3,106 2,722 3,067 14.1 1.3
Iron & Steel 2,101 1,809 2,054 16.1 2.3
Other Metal & Metal Product 1,005 912 1,012 10.1 (0.8)

5
Banks Sectorial Credit | Sector Report

Sectors (Contd…) Oct-22 Oct-21 Sept-22 YoY (%) MoM (%)

All Engineering 1,722 1,513 1,732 13.8 (0.5)
Electronics 406 370 401 9.6 1.2
Others 1,316 1,143 1,331 15.2 (1.1)
Vehicles, Vehicle Parts & Transport Equipment 947 838 920 12.9 2.9
Gems & Jewellery 780 743 780 5.0 (0.1)
Construction 1,185 1,158 1,200 2.3 (1.3)
Infrastructure 12,383 11,171 12,149 10.9 1.9
Power 6,283 5,846 6,210 7.5 1.2
Telecommunications 1,314 1,110 1,315 18.4 (0.1)
Roads 2,790 2,452 2,789 13.8 0.0
Airports 90 76 86 18.2 4.8
Ports 84 100 86 (16.3) (2.3)
Railways (other than Indian Railways 118 141 118 (15.9) 0.2
Other Infrastructure 1,703 1,446 1,545 17.7 10.2
Other industries 2,501 2,202 2,452 13.6 2.0
Industries 32,906 28,974 32,408 13.6 1.5
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
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
July-2022 7.45 7.65 7.55 7.50 9.70 8.50 4.49 9.25 6.91 4.49 9.70 7.55
Aug-2022 7.50 7.70 7.65 7.55 9.90 8.53 4.60 9.10 7.00 4.60 9.90 7.65
Sep-2022 7.55 7.80 7.70 7.65 10.00 8.75 4.54 9.10 7.15 4.54 10.00 7.75
Oct-2022 7.60 7.95 7.83 7.70 10.32 8.75 5.27 10.36 7.08 5.27 10.36 7.90
Nov-2022 7.65 8.20 8.05 7.75 10.32 8.90 4.42 9.45 7.23 4.42 10.57 8.05
Source: RBI; IDBI Capital Research

6
Banks Sectorial Credit | Sector Report

Exhibit 6: Industrial and Service sector continued to witness positive growth trajectory
25.0
20.0
15.0
10.0
5.0
-

Mar-20
Apr-20

Oct-20

Mar-21
Apr-21

Oct-21

Mar-22
Apr-22

Oct-22
Jan-20

Jun-20

Jan-21
Jul-20

Jun-21

Jan-22
Jul-21

Jun-22
Jul-22
Aug-20

Aug-21

Aug-22
Feb-20

May-20

Sep-20

Dec-20

May-21
Nov-20

Feb-21

Sep-21

Dec-21

May-22
Nov-21

Feb-22

Sep-22
-5.0

Non-food Credit Agriculture Industry Services Personal Loans

Source: RBI; IDBI Capital Research

Exhibit 7: Vehicle Loan and credit card advances led the retail credit growth story during Oct’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

Aug-22

Oct-22
Jul-20

Jul-21

Jul-22
Jan-20

Jun-20

Aug-20

Jan-21

Jun-21

Aug-21

Jan-22

Jun-22
May-20

Dec-20

May-21

Dec-21

Feb-22

May-22
Feb-20

Sep-20

Nov-20

Feb-21

Sep-21

Nov-21

Sep-22
-5.0

Housing Credit card Vehicle Loans Other Personal Loans

Source: RBI; IDBI Capital Research

7
Banks Sectorial Credit | Sector Report

Exhibit 8: Advances growth to NBFCs, Commercial Real Estate witnessed uptick during Oct’22 while
advances growth to trade and Tourism, Hotel and Restaurant witnessed downtick
60.0

40.0

20.0

0.0

Jan-20

Oct-20
Mar-20
Apr-20

Mar-21
Apr-21

Jul-21

Oct-21

Mar-22
Apr-22

Oct-22
Jul-20

Jul-22
Jun-20

Aug-20

Jan-21

Jun-21

Aug-21

Jan-22

Jun-22

Aug-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

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

Exhibit 9: Vehicle as well as Cement segment Credit showed healthy growth momentum in Oct’22
40.0
30.0
20.0
10.0
0.0
Apr-20

Apr-21

Apr-22

Oct-22
Oct-20

Oct-21
Aug-20

Aug-21

Aug-22
Mar-20

Mar-21

Mar-22
Jan-20

Jun-20

Jan-21

Jan-22
Feb-20

May-20

Jul-20

Dec-20

May-21
Jun-21
Jul-21

Jun-22
Dec-21

May-22

Jul-22
Sep-20

Nov-20

Feb-21

Sep-21

Nov-21

Feb-22

Sep-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

5.5% 5.4% 5.3% 5.4% 5.3% 5.2% 4.9% 4.8% 5.1% 5.2%
100.0%

35.3%
35.9%
36.0%

35.4%
36.5%
36.6%
37.5%
37.7%
38.1%
38.0%
80.0%
60.0%
40.0%

59.6%

59.4%
59.2%
59.1%
58.3%
58.1%
57.1%
56.9%
56.6%
56.5%
20.0%
0.0%
Q1FY23 Q4FY22 Q3FY22 Q2FY22 Q1FY22 Q4FY21 Q3FY21 Q2FY21 Q1FY21 Q4FY20
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

10.0
12.0

4.0
6.0
8.0

2.00
4.00
6.00
8.00
Jan-18 10.00 Jan-20
Feb-20
Feb-18 Mar-20
Mar-18 Apr-20
Apr-18 May-20
Jun-20
May-18 Jul-20
Jun-18 Aug-20
Jul-18 Sep-20
Oct-20
PSBs

Aug-18 Nov-20

Source: RBI; IDBI Capital Research

Source: RBI; IDBI Capital Research

Sep-18 Dec-20
Oct-18 Jan-21
Feb-21
Nov-18 Mar-21
Dec-18 Apr-21
Jan-19 May-21
June-21
PVBs

Feb-19 July-21
Mar-19 Aug-21
Apr-19 Sep-21
Oct-21
May-19 Nov-21
Jun-19 Dec-21
Jul-19 Jan-22
FBs

Feb-22
Aug-19 Mar-22
Sep-19 Apr-22
(WALR) (On Fresh Rupee Loans Sanctioned)
Exhibit 11: Weighted Average Lending Rates

Oct-19 May-22
Jun-22
PSBs

Nov-19 Jul-22
Dec-19 Aug-22
Jan-20 Sep-22
Oct-22
Feb-20
Mar-20
Apr-20
May-20
Jun-20
10.0
12.0

4.0
6.0
8.0

PVBs

July-20
Aug-20
Sep-20 Jan-20
Oct-20 Feb-20
Nov-20 Mar-20
Apr-20
Dec-20 May-20
Jan-21 Jun-20
Jul-20
FBs

Feb-21 Aug-20
Mar-21 Sep-20
Oct-20
PSBs

Apr-21 Nov-20
Source: RBI; IDBI Capital Research

May-21 Dec-20
June-21 Jan-21
July-21 Feb-21
Aug-21 Mar-21
Apr-21
Sep-21 May-21
June-21
PVBs

Oct-21 July-21
Nov-21 Aug-21
Dec-21 Sep-21
Jan-22 Oct-21
Nov-21
Feb-22 Dec-21
(WALR) (On Outstanding Rupee Loans)

Mar-22 Jan-22
FBs

Apr-22 Feb-22
Mar-22
May-22 Apr-22
Exhibit 12: Weighted Average Lending Rates

Jun-22 May-22
Jul-22 Jun-22
Jul-22
Aug-22 Aug-22
Sep-22
Exhibit 13: Weighted Average Domestic Term Deposit Rates (WADTDR) (Outstanding Rupee Term Deposits)

Sep-22 Oct-22
Oct-22
10
Banks Sectorial Credit | Sector Report

Exhibit 14: NBFC AAA yields- from Jan’21 onwards 5yrs yield seen hardening by 204 bps and 10yrs yield of 115 bps

11.50
10.50
9.50
8.50
7.50
6.50
5.50
4.50
3.50

Mar-13

Apr-14

Apr-18

Apr-22
Jul-20
Aug-12

Jun-15

Jan-16

Aug-16

Jun-19

Jan-20
Sep-13

Nov-14

Feb-17

Sep-17

Nov-18

Feb-21

Sep-21

Nov-22
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 185 bps and 10yrs yield of 110 bps

11.50
10.00
8.50
7.00
5.50
4.00
Mar-13

Oct-13

Jan-15

Mar-16

Oct-16

Apr-19

Apr-22
Jun-20
Aug-12

Aug-15

Jun-17

Jan-18

Aug-18

Jan-21
May-14

Nov-19

Sep-21

Nov-22
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 212 bps and 10yrs yield
by 108 bps
14.50
12.50
10.50
8.50
6.50
4.50
2.50

Mar-18
Oct-17

Apr-19

Oct-21
Jul-18

Jun-21

Jul-22
Jan-16

Jan-17

Jun-17

Aug-19

Jan-21
May-16

Dec-19

May-20
Sep-16

Nov-18

Sep-20

Feb-22

Nov-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 harden by 205 bps and 10yrs yield
by 121 bps
12.00
11.00
10.00
9.00
8.00
7.00
6.00

Nov-20
Feb-21

Nov-21
Feb-22

Nov-22
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18

Apr-19

Oct-19

Apr-20
Jan-16

Jan-17

Jan-18

Jan-19

Jan-20
Jul-16

Jul-17

Jul-18

Jul-19

Aug-20

Aug-21

Aug-22
May-21

May-22
1 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 205 bps and 10yrs yield
increased by 144 bps.
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00

Mar-18

Jan-21
Jan-16

Jan-17

Oct-17

Apr-19

Oct-21
Jul-18

Jul-22
Jun-17

Aug-19

Jun-21
May-16

Dec-19

May-20
Sep-16

Nov-18

Sep-20

Feb-22

Nov-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 206 bps.
14.50
13.50
12.50
11.50
10.50
9.50
8.50
7.50
6.50

Mar-18
Mar-05
Oct-05

Mar-08
Oct-08

Feb-11
Sep-11
Apr-12
Nov-12

Mar-15
Oct-15

Aug-17

Oct-18

Feb-21
Sep-21
Apr-22
Nov-22
Jan-14
Jul-07

Jul-10

Jul-20
Aug-04

Jun-13

Aug-14
May-06
Dec-06

May-09
Dec-09

May-16
Dec-16

May-19
Dec-19
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 141bps
10.00
9.00
8.00
7.00
6.00
5.00
4.00

Jan-13
Mar-06

Oct-07

Apr-09

Oct-10

Apr-12

Oct-13

Apr-15

Oct-16

Apr-18
Jan-10

Jan-16

Jan-19
Jul-08

Jul-11

Jul-14

Jul-17
Jun-05

Aug-20
Dec-06

May-21
Nov-19

Feb-22
Nov-22
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-20
Apr-09

Apr-12
Mar-06
Dec-06
Oct-07
Jul-08

Oct-10
Jul-11

Oct-13

Apr-15
Jul-14

Oct-16

Apr-18
Jul-17
Jun-05

Jan-10

Jan-13

Jan-16

Jan-19

May-21
Nov-19

Feb-22
Nov-22
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 23-Apr-08 23-Mar-11 19-Feb-14 18-Jan-17 18-Dec-19 22-Nov-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-09

Mar-12

Apr-15

Oct-16

Apr-18

Oct-19

Apr-21
Jan-22
Jul-14

Jul-17

Jul-20
Jun-08

Jun-11

Jan-16

Jan-19
May-05

Dec-09

Dec-12
Feb-06
Nov-06
Sep-07

Sep-10

Sep-13

Nov-22
10 Year AAA Corp yield Gsec 10 yrs yield (%) Spread between G-Sec and 10 Year AAA Corp yield
Source: Bloomberg; IDBI Capital Research

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Banks Sectorial Credit | Sector Report

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

12
10
8
6
4
2
0

Mar-17
Mar-08
Oct-08

Mar-12

Apr-13

Oct-17

Mar-21
Oct-21
Apr-22
Jul-06

Jul-15

Jul-19
Aug-07

Jun-10
Jan-11
Aug-11

Jun-14

Jan-20
Aug-20
May-05
Dec-05

May-09

Dec-14

May-18
Dec-18
Feb-07

Nov-09

Sep-12

Nov-13

Feb-16
Sep-16

Nov-22
10 Year AA Corp yield Gsec 10 yrs yield (%) Spread between G-Sec and 10 Year AA Corp yield
Source: Bloomberg; IDBI Capital Research

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Banks Sectorial Credit | Sector Report

Exhibit 25: Corporate bond Raised by NBFCs on MoM basis

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

HDFC 30.0 125.0 - 20.0 100.0 - 77.4 30.0 181.1 - 90.1 66.5 59.0

LIC HF 27.0 24.0 - 23.6 23.8 - - 10.0 - 70.0 - - 20.0

PNB HF - - - - - - - - - - - - -

Shriram Transport 21.0 2.8 70.8 17.8 17.8 8.0 - - 1.2 33.0 4.7 1.4 0.8

Cholafin - 10.0 - 8.5 4.0 9.8 4.0 5.0 8.0 3.3 0.2 0.2 5.0

Sundaram Finance 10.0 - - - - 5.0 - 4.0 2.0 5.0 - 5.0 9.6

Shriram City Union 3.0 6.0 - 6.2 - - 6.5 - - - 4.0 1.5 -

Muthoot Finance - - - 7.0 7.0 - 3.8 2.7 - - 7.4 - 2.7

Manappuram Finance - 5.0 5.0 - - - - - 7.7 - - - -

Bajaj Finance - 9.3 - 49.2 49.2 - - 22.5 7.5 12.3 3.3 6.1 51.0

M&M Financial 3.8 - 3.0 8.0 - - - - 3.0 10.3 20.0 7.5 5.8

Piramal Enterprise - - - - 4.8 - 2.0 - - - 2.7 - 10.0

L&T Finance 2.2 4.5 - 5.7 - - - - 7.0 7.0 - 5.0 4.0

Indiabulls Housing - 10.0 15.5 - - 160.0 - - - - 30.7 - -

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 2,771 902 1,120 BUY 405 463 323 371 194 219 63.1 71.4 420 487 14.3 12.6 2.1 1.9 1.6 1.6 15.5 15.1
DCB Bank 41 131 140 BUY 15 18 9 11 4 5 13.7 17.2 128 141 9.6 7.6 1.0 0.9 0.9 1.0 10.0 11.3
Federal Bank 278 131 151 BUY 71 81 47 56 28 34 13.2 16.0 95 108 10.0 8.2 1.4 1.2 1.2 1.3 13.9 14.9
HDFC Bank 8,970 1,609 1,860 BUY 852 988 745 859 430 489 77.5 88.2 498 579 20.8 18.2 3.2 2.8 1.9 1.9 16.5 16.2
IndusInd Bank 905 1,167 1,450 BUY 175 198 141 165 73 85 94.1 110.1 687 793 12.4 10.6 1.7 1.5 1.7 1.8 14.2 14.5
ICICI Bank 6,649 953 1,050 BUY 581 655 465 540 306 371 43.9 53.3 284 358 21.7 17.9 3.4 2.7 2.0 2.1 16.0 15.7
City Union Bank 140 189 230 BUY 22 26 17 19 9 11 12.0 14.6 91 104 15.7 12.9 2.1 1.8 1.4 1.5 12.6 13.4
Housing Finance
HDFC 4,904 2,692 2,950 BUY 190 223 218 252 156 180 86.2 99.5 677 735 31.2 27.1 4.0 3.7 2.3 2.3 12.5 13.3
Repco Home Fin 15 246 300 BUY 5 6 4 5 2 3 39.4 44.5 321 366 6.2 5.5 0.8 0.7 2.0 2.1 10.5 10.7
Gold Finance
Manappuram Fin 97 115 140 BUY 41 46 21 24 13 15 15.4 17.6 107 121 7.5 6.5 1.1 1.0 3.7 3.7 14.6 14.9
Muthoot Fin 434 1,081 1,250 HOLD 68 77 49 55 35 40 88.3 99.3 480 557 12.2 10.9 2.3 1.9 4.8 5.0 18.4 18.4
Vehicle Finance
Cholafin 589 717 840 BUY 59 71 42 51 25 30 30.9 36.8 146 177 23.2 19.5 4.9 4.0 2.9 2.9 19.7 19.4
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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