Best Private Bank Stocks in India: As of May 2023, India has a total of 25 listed private banks. There are only six large-cap banks which are very well known to us like HDFC Bank, Axis Bank, and ICICI Bank. A Large Cap stocks belong to more matured, established businesses with a good track record.
The small and mid-cap stocks are less risky which makes them a more conservative portfolio investment. Keep reading to find out more about the Best Private Bank Stocks in India.
Industry Overview
The banking industry in India is a significant contributor to the country’s economy. It Consists of cooperative credit institutions, 12 public sector listed banks, 25 private sector listed banks, 44 foreign banks, 43 regional rural banks, 1,484 urban cooperative banks, and 96,000 rural cooperative banks.
The private sector banks in India are currently doing well in terms of supply, product range, and reach. They are aiming to increase their reach in rural locations. The foreign banks have also on the verge to expand their footprint in the country.
And private banks provide personal services to manage financial assets with a holistic approach and offer a personalized solution for investments. The Private banking sector assets were $925.05 billion as of 2022.
Indian private banking sector is anticipated to grow by 8% by 2028 as a result of increased disposable income. Private banks in India have been gaining market share in the banking industry over the past few years.
According to the latest RBI data, private bank’s market share in total credit increased to 38.4% in September 2022 from 37.5% a year ago in 2020, Private banks’ market share in loans rose to 36.04% in 2022 from 21.26% in 2015.
Here are a few important metrics that you should know before analyzing a stock:
- Net Interest Income (NII): It is the difference between the interest the bank receives from lending to its customers and the interest paid to account holders.
- CASA Ratio: It is a ratio of deposits in current and savings accounts to total deposits. A high CASA ratio indicates a lower cost of funds.
- Credit Deposit Ratio (CDR): It is the ratio of how much a bank lends out of the deposits it has mobilized.
- Gross Non-performing asset (GNPA): It is the total value of all unpaid loans that are classified as non-performing loans.
Best Private Bank Stocks In India
Now let us have a look at the best private banking stocks in India. We will take a look at the top five stocks, their core business and financials.
Best Private Bank Stocks In India #1 – HDFC Bank
| Face Value (₹) | 1 | ROE(%): | 16.70% |
|---|---|---|---|
| Market Cap (Cr): | ₹ 9,07,505 | Net interest margin(%): | 3.67 |
| EPS (₹): | 82.38 | Credit deposit ratio(CDR): | 85% |
| Stock P/E (TTM): | 19.73 | CASA Ratio: | 100 |
| Dividend Yield(%): | 1.05% | Gross NPA(%): | 1.12 |
HDFC Bank is a listed bank. Established in August 1994, it was the was the first private bank in India. The bank provides banking and financial services like retail banking and treasury operations.
As of March 2023, the bank served over 83 million customers across 7,821 branches and 19,727 ATMs. It is the third-largest firm in India by market value and the fifth-largest bank by assets.
HDFC Bank Ltd is India’s largest private-sector bank and the world’s tenth-largest bank by market capitalization.
HDFC Bank controls 47% of the POS and e-commerce platform sector. In FY 22-23, HDFC Bank reported a net interest income of Rs 92,970 crores and a net profit of Rs 46,149 crores.
The bank has periodically improved quarterly numbers while maintaining an impressive dividend yield of 1.17%. In addition, the bank is carefully managing its non-performing assets at a rate of 0.36%.
The National Company Law Tribunal (NCLT) and the Reserve Bank of India (RBI) approved the merger of HDFC Bank with its parent company HDFC Ltd. The said merger is expected to be completed by June 2023.
The combined entity will be called HDFC Bank. The existing HDFC shareholders will hold 41% of the bank after the merger. HDFC Bank will be 100 percent owned by public shareholders.
The proposed entity will have a combined asset base of around Rs 18 lakh crore. The combined market cap of HDFC Bank and HDFC ($52 billion) would be around $160 billion.
Best Private Bank Stocks In India #2 – ICICI Bank
| Face Value (₹) | 2 | ROE(%): | 15.49 % |
|---|---|---|---|
| Market Cap (Cr): | ₹ 6,47,532.81 | Net interest margin(%): | 3.60% |
| EPS (₹): | 48.72 | Credit deposit ratio(CDR): | 84.50% |
| Stock P/E (TTM): | 19.02 | CASA Ratio: | 0 |
| Dividend Yield(%): | 0.68% | Gross NPA(%): | 2.81 |
ICICI Bank is a significant private bank in India. It was founded in 1994 as a wholly-owned subsidiary of ICICI Limited, an Indian financial institution. It provides a wide range of financial services to corporate and retail clients in areas like investment banking, life and non-life insurance, mortgages, and online banking.
The bank has four main segments: Retail Banking, Wholesale Banking, Treasury, and Other Banking.
The ICICI is the first bank in India to provide comprehensive mobile banking, jewelry card solutions, and lifestyle benefits to banking services for exclusive transactions.
The bank serves over 52 million customers across 5,275 branches and 15,589 ATMs and the bank its a presence in 17 countries worldwide.
In Q4-2023, the Bank had a 30% market share by value in electronic toll collections via FASTag, with collections increasing 18% year on year.
The bank reported a net interest income of Rs 62,129 crores and a net profit of Rs 34,463 Crores in FY22-23, The advances of the company grew by 17.77 % over the previous year.
Over the past five years, the bank achieved 34.6% CAGR in profit growth.
Best Private Bank Stocks In India #3 – Kotak Mahindra Bank
| Face Value (₹) | 5 | ROE(%): | 13.19 % |
|---|---|---|---|
| Market Cap (Cr): | ₹ 3,83,077.64 | Net interest margin(%): | 4.47 % |
| EPS (₹): | 75.13 | Credit deposit ratio(CDR): | 88.09% |
| Stock P/E (TTM): | 25.67 | CASA Ratio: | 0 |
| Dividend Yield(%): | 0.06% | Gross NPA(%): | 1.76% |
Kotak Mahindra Bank is an Indian banking and financial services company headquartered in Mumbai.
It offers banking products and financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance, and wealth management.
It is India’s third-largest private sector bank by market capitalization.
In February 2003, Kotak Mahindra Finance received a banking license from the Reserve Bank of India. It became the first non-banking finance company in India to be converted into a bank.
As of March 2023, the bank has 41.2 million customers across 1,780 branches and 2,963 ATMs
In FY22-23, Kotak Mahindra Bank reported a net interest income of Rs 21,552 crores and a net profit of Rs 14,780 Cr.
The bank deposits have raised year on year. Bank has maintained substantial growth in Revenue every Quarter for the past 8 Quarters.
Finally, Over the past five years, the bank achieved 19.3% CAGR in profit growth.
Best Private Bank Stocks In India #4 – Axis Bank
| Face Value (₹) | 2 | ROE(%): | 12.78% |
|---|---|---|---|
| Market Cap (Cr): | ₹ 2,66,222.4 | Net interest margin(%): | 3.27 % |
| EPS (₹): | 35.15 | Credit deposit ratio(CDR): | 89.26% |
| Stock P/E (TTM): | 24.61 | CASA Ratio: | 0 |
| Dividend Yield(%): | 0.13% | Gross NPA(%): | 2.02 |
Axis Bank was founded in 1993 and has its headquarters in Mumbai. The bank has a presence in the UK through its subsidiary, Axis Bank UK Limited.
Axis Bank provides lending services, liability products, card services, depository, financial advisory services, and NRI services to individuals and small businesses.
The bank engaged in capital market services, foreign currency and derivatives, cross-border commerce, correspondent banking services, and tax collection.
As of March FY23, the bank has 11 million customers through a vast network of 4,903 branches and 15,953 ATMs.
The Axis Mobile app is the best-rated mobile banking app in the world with ratings of 4.8. Further, the bank has 11 MAU with 7.8 million non-Axis customers using Axis Mobile & Axis Pay.
The bank is the second-largest player in the Indian market with an 18% market share in UPI transactions and 17% in UPI P2M.
Axis Bank acquired Citibank India’s consumer businesses of India, in March FY23 for a deal of INR 11,603 Cr.
Axis Bank recently acquired Citibank India’s business. The bank received INR 947 billion of AUM from Citibank, totaling INR 3785 billion, making it the sector’s third largest.
It reported a net interest income of Rs 42,946 crores and a net profit by Rs 23,342 in FY23.
Best Private Bank Stocks In India #5 – Induslnd Bank
| Face Value (₹) | 10 | ROE(%): | 10.57% |
|---|---|---|---|
| Market Cap (Cr): | ₹83,335.02 | Net interest margin(%): | 3.84 % |
| EPS (₹): | 95.93 | Credit deposit ratio(CDR): | 86.17% |
| Stock P/E (TTM): | 11.2 | CASA Ratio: | 0 |
| Dividend Yield(%): | 0.91% | Gross NPA(%): | 1.98 |
IndusInd Bank Limited, founded in 1994, derives its name from the Indus Valley civilization. In June 2004, the bank amalgamated with Ashok Leyland Financing, one of India’s leading leasing financing and hire purchase businesses.
The bank offers a comprehensive range of banking products and financial services to corporate and retail clients.
The bank also offers treasury services for which it has implemented multi-channel infrastructure technology to serve commercial clients.
As of March FY23, the bank has 34 million customers with a wide network of 6,491 branches, and 2,878 ATMs.
The bank was able to increase deposits by 14.5% year on year. Their working capital needs were reduced from 85.8 days to 67.2 days.
IndusInd bank reported a net interest income of Rs 17,592 crore and a net profit of Rs 7,443 crore, in FY23.
Complete List Of Private Bank Stocks in India
| Sl No | Company | Industry | MCap(Cr) | Current Price (Rs) | PE Ratio TTM |
|---|---|---|---|---|---|
| 1 | HDFC Bank Ltd. | Bank - Private | ₹913,555.15 | ₹1,634.85 | 19.86 |
| 2 | ICICI Bank Ltd. | Bank - Private | ₹662,720.24 | ₹947.85 | 19.47 |
| 3 | Kotak Mahindra Bank Ltd. | Bank - Private | ₹387,966.07 | ₹1,950.95 | 25.97 |
| 4 | Axis Bank Ltd. | Bank - Private | ₹286,085.03 | ₹929.20 | 26.44 |
| 5 | IndusInd Bank Ltd. | Bank - Private | ₹99,679.42 | ₹1,284.65 | 13.39 |
| 6 | IDBI Bank Ltd. | Bank - Private | ₹59,202.73 | ₹55.06 | 15.97 |
| 7 | AU Small Finance Bank Ltd. | Bank - Private | ₹52,714.19 | ₹790.40 | 32.55 |
| 8 | IDFC First Bank Ltd. | Bank - Private | ₹46,490.74 | ₹70.17 | 18.71 |
| 9 | Yes Bank Ltd. | Bank - Private | ₹45,663.44 | ₹15.88 | 62.06 |
| 10 | Bandhan Bank Ltd. | Bank - Private | ₹42,518.52 | ₹263.95 | 19.37 |
| 11 | The Federal Bank Ltd. | Bank - Private | ₹26,560.75 | ₹125.45 | 8.39 |
| 12 | Equitas Small Finance Bank Ltd. | Bank - Private | ₹9,488.17 | ₹85.36 | 16.54 |
| 13 | City Union Bank Ltd. | Bank - Private | ₹9,307.03 | ₹125.70 | 9.93 |
| 14 | RBL Bank Ltd. | Bank - Private | ₹9,218.38 | ₹153.75 | 10.03 |
| 15 | Karur Vysya Bank Ltd. | Bank - Private | ₹8,584.69 | ₹107.00 | 7.76 |
| 16 | Ujjivan Small Finance Bank Ltd. | Bank - Private | ₹6,667.66 | ₹34.11 | 6.06 |
| 17 | Tamilnad Mercantile Bank Ltd. | Bank - Private | ₹6,539.92 | ₹413.00 | 6.35 |
| 18 | The Jammu & Kashmir Bank Ltd. | Bank - Private | ₹5,645.29 | ₹54.73 | 4.78 |
| 19 | CSB Bank Ltd. | Bank - Private | ₹4,887.96 | ₹281.75 | 8.93 |
| 20 | The Karnataka Bank Ltd. | Bank - Private | ₹4,591.22 | ₹147.05 | 3.89 |
| 21 | DCB Bank Ltd. | Bank - Private | ₹3,613.14 | ₹115.95 | 7.76 |
| 22 | The South Indian Bank Ltd. | Bank - Private | ₹3,589.05 | ₹17.15 | 4.63 |
| 23 | Fino Payments Bank Ltd. | Bank - Private | ₹1,717.96 | ₹206.45 | 26.40 |
| 24 | Suryoday Small Finance Bank Ltd. | Bank - Private | ₹1,520.19 | ₹143.20 | 19.56 |
| 25 | Dhanlaxmi Bank Ltd. | Bank - Private | ₹420.51 | ₹16.62 | 8.52 |
In Closing
Investing in large-cap private banks gives consistent profits, regular dividend payments, and portfolio stability. As the Indian financial system grows, major players in the market will be beneficial. After analyzing all other considerations, investors may be able to invest in them.
In this article, we looked at the best private bank stocks in India. That’s all for this post! Happy investing!
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