- 24 Oct 2024
7 mins read- By: BlinkX Research Team
Banking stocks in India are a popular choice among investors due to their growth potential, reliable dividend payouts, and crucial role in the country's financial ecosystem. As the Indian economy continues to expand, investing in banking stocks provides a valuable opportunity to benefit from the sector's growth. In this blog, we will explore banking stocks based on their PE ratio, discuss how this metric can help investors identify bank stocks, assess their true value, and make informed investment decisions for 2024.
What are Banking Stocks?
Banking sector shares represent shares of companies providing financial services, which include commercial banks, investment banks, and insurance firms. Prominent private sector banks in India offer a range of financial services, including deposit-taking, lending, and funding investment products to their clients. The performance of banking stocks in India depends on the overall condition of the economy. Consequently, banking sector shares play a critical role in offering liquidity to companies and people.
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Table of Contents
- What are Banking Stocks?
- List of Banking Stocks in India in 2024
- Overview of Banking Stocks in India in 2024
- Understand Banking Sector in India
- How to Identify the Best Banking Stocks to Buy in India?
- Factors to Consider While Investing in Banking Stocks
- How to Invest in Banking Stocks?
- What is Bank NIFTY?
- How Does NIFTY Bank Work?
- How NIFTY Bank is Calculated?
- Advantages of Investing in Banking Stocks
List of Banking Stocks in India in 2024
Below is a list of 10 banking stocks in India in the year 2024 along with significant data.
Stock Name | CAGR of 5 Years [27th Aug’24] | P/E Ratio |
| South Indian Bank Limited | 21% | 5.78 |
| State Bank of India | 24% | 9.99 |
| Federal Bank Limited | 20% | 12 |
| IndusInd Bank Limited | 0% | 12 |
| Bandhan Bank Limited | -15% | 12.6 |
| Axis Bank Limited | 12% | 13.7 |
| HDFC Bank Limited | 8% | 18.3 |
| ICICI Bank Limited | 25% | 19.1 |
| Kotak Mahindra Bank Limited | 4% | 19.2 |
| Yes Bank Limited | -16% | 51.8 |
Disclaimer: The information provided on the above stocks is for informational purposes only. It is crucial to conduct thorough research before making any investment decisions regarding these stocks. We do not recommend trading any stocks without comprehensive research and professional financial advice. Always consult with a certified financial advisor to ensure informed and appropriate investment choices.
Overview of Banking Stocks in India in 2024
India's banking sector consists of both public and private banking institutions. All ten of these banks have a rich heritage, clear strategic focus, and market standing.
South Indian Bank Limited
- South Indian Bank was founded in 1929, headquartered in Thrissur, Kerala.
- It is one of the oldest private-sector banks in the country.
- The bank offers an all-round banking service like personal banking, corporate banking, and NRI banking.
- The bank has a strong regional focus in South India and has been expanding its operations to other parts of the country.
Get more details about South Indian Bank Limited share price here.
Know the South Indian Bank Limited Share Price History here.
State Bank of India Limited (SBI)
- The State Bank of India is the oldest and largest banking institution in the Indian subcontinent.
- Originally, it was established as the Bank of Calcutta in 1806.
- The bank was restructured as the State Bank of India in 1955 after an amalgamation of a few small banks.
- State Bank of India is a public sector bank and has its headquarters in Mumbai. It forms the backbone of the Indian banking system.
- A wide network of branches and ATMs present in every part of the country, with a remarkable international presence, facilitates customers with all sorts of banking products and services.
Get more details about State Bank of India Limited share price here.
Know the State Bank of India Limited Share Price History here.
Federal Bank Limited
- Federal Bank, with its headquarters in Aluva, Kerala, was established in 1947.
- It is one of the largest private sector banks in India and therefore enjoys a significant market presence in southern India.
- The bank provides an array of services related to banking and finance, including personal banking, corporate banking, and treasury services.
- It has earned goodwill for its reliability and efficiency while providing effective and quality services to its customers.
Get more details about Federal Bank Limited share price here.
Know the Federal Bank Limited Share Price History here.
IndusInd Bank Limited
- Mumbai-headquartered IndusInd Bank was established in 1994.
- It is a leading private sector bank, offering a wide range of banking and financial services in the areas of retail banking, corporate banking, and treasury services.
- IndusInd Bank is quite popular due to its innovative banking services driven by the latest technology.
- It enjoys a great market presence and is growing aggressively in both domestic and international markets.
Get more details about IndusInd Bank Limited share price here.
Know the IndusInd Bank Limited Share Price History here.
Bandhan Bank Limited
- Headquartered in Kolkata, Bandhan Bank came into existence in the year 2015 and thus emerged as a full-fledged bank from a microfinance institution.
- It was an NGO dealing in microfinance activities that later turned into a bank after getting a licence from the Reserve Bank of India.
- Bandhan Bank caters to the underbanked and unbanked target segments.
- It has swiftly caught up to turn out to be a powerful player in the banking industry with a huge presence in the rural area.
Get more details about Bandhan Bank Limited share price here.
Know the Bandhan Bank Limited Share Price History here.
Axis Bank Limited
- Axis Bank-formerly UTI Bank was established in 1993, renamed in 2007, and is headquartered in Mumbai.
- It is considered one of the biggest private-sector banks in India.
- The bank offers a wide array of products and services, including retail banking, corporate banking, and investment banking.
- Additionally, the bank leads in technology integration to facilitate unmatched customer experiences through digital channels and modern banking solutions.
Get more details about Axis Bank Limited share price here.
Know the Axis Bank Limited Share Price History here.
HDFC Bank Limited
- HDFC Bank is part of the Housing Development Finance Corporation (HDFC) group and represents one of India's premier private sector banks.
- The company started its operations in 1994, and within a short period, it started offering personalized service to its customers and technological brilliance.
- Headquartered in Mumbai, HDFC Bank provides a wide array of products and services that include retail banking, corporate banking, and treasury services.
- It is famed for its strength in financial performance and is the largest branch and ATM network in India.
Get more details about HDFC Bank Limited share price here.
Know the HDFC Bank Limited Share Price History here.
ICICI Bank Limited
- ICICI Bank, established in the year 1994, was earlier known as the Industrial Credit and Investment Corporation of India.
- It is also one of the largest private-sector banks in the country. ICICI Bank has its headquarters in Mumbai.
- The bank provides a range of banking, insurance as well as asset management services.
- The bank has considerable international exposure with its branches spanning across the globe.
- It is especially renowned for its pioneering digital banking method.
Get more details about ICICI Bank Limited share price here.
Know the ICICI Bank Limited Share Price History here.
Kotak Mahindra Bank Limited
- Kotak Mahindra Bank was formed in 2003 after the conversion of Kotak Mahindra Finance Limited, which was set up in 1985.
- Kotak Mahindra Bank is headquartered in Mumbai and is one of the players in the private-sector banking arena.
- The bank operates a diverse range of financial services, comprising personal banking, commercial banking, and wealth management.
- Kotak Mahindra Bank is expanding rapidly in the national and international markets, along with a strong retail banking segment.
Get more details about Kotak Mahindra Bank Limited share price here.
Know the Kotak Mahindra Bank Limited Share Price History here.
Yes Bank Limited
- Yes Bank was founded in the year 2004 and is headquartered out of Mumbai.
- In essence, this is one of the newer private sector banks in the country, but it has risen meteorically to be among the leading banks in the financial sector.
- Yes Bank operates a host of banking products and services, including retail banking, corporate banking, and investment banking.
Get more details about Yes Bank Limited share price here.
Know the Yes Bank Limited Share Price History here.
Understand Banking Sector in India
In India, the banking sector is composed mainly of public, private, and foreign banks' stocks. Yet, the top banks for investment in India hold a lot of importance inside the country's financial system, contributing significantly to the GDP and presenting important financing and lending offerings to each company and individual. Historically, shares from the banking sector, representing top banks for investment in India, have reliably provided traders with sustained growth and income over a long time.
However, the latest shifts and improvements, which include the emergence of fintech corporations, have transformed the conventional banking panorama. Despite those modifications, banking stocks in India have displayed resilience, adapting to these adjustments to continue delivering value to investors. Utilizing a banking shares list as part of your investment strategy can improve overall portfolio performance
How to Identify the Best Banking Stocks to Buy in India?
Identifying the top banking stocks in India based on common ratios, which requires a comprehensive approach. Here's how you can evaluate banking stocks using these ratios:
Price-to-Earnings (P/E) Ratio
- Compare the P/E ratio to the bank’s historical average and its industry peers. A lower P/E ratio may indicate the stock is potentially undervalued.
- Take into account the bank’s growth prospects; hence, a higher P/E ratio may be justified for banks with significant growth potential.
Price-to-Book (P/B) Ratio
- Look for banks with a P/B ratio below 1.0, indicating possible undervaluation compared to their book value.
- Exercise caution with banks having very low P/B ratios, as it can signal underlying problems.
Efficiency Ratio
- A lower efficiency ratio signifies better operational efficiency and profitability, so target banks with an efficiency ratio below 60%.
- Compare the efficiency ratio against the industry average and the bank’s historical performance.
Loan-to-Deposit Ratio (LDR)
- An LDR ranging between 70% and 85% is generally considered healthy, indicating effective utilisation of deposits for lending and income generation.
- Avoid banks with excessively high LDRs, which may imply risk exposure.
Capital Ratios
- Analyse critical capital ratios like the Tier 1 Capital Ratio and Total Capital Ratio, which measure a bank's resilience in losses.
