HDFC Bank vs ICICI Bank vs Axis Bank vs Indusind Bank: Which stock offers more value for your buck?

Which stock out of the top private lenders — HDFC Bank, ICICI Bank, Axis Bank and Indusind Bank — is giving you more value for the buck you are spending? One way to look at it is Price-to-Earnings (PE) ratio. In a layman’s terms, a PE ratio determines the amount of money an investor is willing to pay for each rupee of profit that a company makes.

The P/E ratio is indicative of whether the stock of a company is overvalued or undervalued compared to its earnings. This metric also suggests what people feel about the growth potential of the stock. A high PE ratio means that the market is willing to pay a high price for the stock.

Another way to look at it is the Price-to-book value (P/B) which is the ratio of company's share price against its book value of equity i.e. value of a company's assets expressed on the balance sheet. It is indicative of whether company's stock price is valued properly.

A P/B ratio of 1 means that the stock price is on par with the book value of the company while a P/B ratio below 1 signals that a stock may be undervalued. Number above 1 determines that the stock is overvalued.

See Table

Q2FY23 Earnings Comparison

Investors can make their investment decision relying on above metrics and see what they want to pay for their favourite stock.

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Analyst View on Valuations

On valuation, market expert Sandeep Jain said that no stock among them was overvalued and all have good growth potential. However, he remains bullish on ICICI Bank over the long term.

His advice to investors is to view the stock based on price-to-book value. The banks are into lending business and one must consider the asset quality while making a move in banking sector stock, he reasoned. 

HDFC Bank Vs ICICI Bank Vs Axis Bank Vs Indusind Bank Vs BSE SENSEX

HDFC Bank stock (+22.76 per cent) has outperformed the Sensex (+13.75 per cent) over the six month period and has been on par with the S&P BSE Bankex (+22.94 per cent). On the YTD basis, HDFC Bank (6.18 per cent) has underperformed Bankex (+16.84 per cent) and outperformed the Sensex (3.31 per cent).

ICICI Bank stock (+29.83 per cent) has outperformed the Sensex (+12.55 per cent) and S&P BSE Bankex (+22.17 per cent) over the six month period. On the YTD basis, ICICI Bank (20.46 per cent) has outperformed Sensex (3.31 per cent) and Bankex (16.84 per cent).

Axis Bank stock (+29.19 per cent) has outperformed the Sensex (+12.55 per cent) and S&P BSE Bankex (+22.17 per cent) over the six month period. On the YTD basis, Axis Bank (24.90 per cent) has outperformed Sensex (3.31 per cent) and Bankex (16.84 per cent).

Indusind Bank stock (+27.11 per cent) has outperformed the Sensex (+12.55 per cent) and S&P BSE Bankex (+22.17 per cent) over the six month period. On the YTD basis, Indusind Bank (24.89 per cent) has outperformed Sensex (3.31 per cent) and Bankex (16.84 per cent).

HDFC Bank shares were trading at Rs 1,614.35 on the NSE, up Rs 15.20 or 0.95 perc cent at 1:40 pm on Thursday.

What brokerages say?

ICICI Bank: Buy | Recommended at: Rs 914 | Target: Rs 1250 | Upside: 37%

Morgan Stanley maintains an ‘Overweight’ on ICICI Bank. The stock was recommended at a price of Rs 914.

CLSA on ICICI Bank | Recommended at Rs 920 | Target: Rs 1200 | Upside: 23% 

CLSA maintains a Buy on this stock citing NIM margins outlook to remain positive with pickup in broad-based growth. Pristine asset quality with 17 per cent return on equity is estimated and it remains a top pick for this brokerage. 

Meanwhile, HSBC maintains a Buy with price target of Rs 1100. 

ICICI Bank stock was trading at Rs 935.70 on the NSE and was up by Rs 8.25 or 0.89 per cent.

Indusind Bank: Buy | Recommended at: Rs 1144 | Target: Rs 1377 | Upside: 20%

Goldman Sachs has cut its target from Rs 1389 to Rs 1377. The counter was recommended at a price of Rs 1144.

Indusind Bank stock was trading at Rs 1,171.05 on the NSE and was down by Rs 3.30 or 0.28 per cent.  

Axis Bank: Buy | Recommended at: Rs 858 | Target: Rs 1150 | Upside: 34%

Morgan Stanley maintains an ‘Overweight’ rating on Axis Bank. The stock was recommended at a price of Rs 858. HSBC maintain a ‘Buy’ for target of Rs 1150. 

Axis Bank stock was trading at Rs 874.05 on the NSE and was down by Rs 3.30 or 0.07 per cent.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)