Sell YES Bank, PNB shares; buy HDFC Bank, ICICI Bank stocks, says Goldman Sachs

Goldman Sachs has initiated coverage a handful of bank stocks. They included YES Bank Ltd, HDFC Bank Ltd, Kotak Mahindra Bank Ltd (KMB) State Bank of India (SBI), Punjab National Bank Ltd, IDFC First Bank Ltd, Federal Bank and IndusInd Bank Ltd. The targets suggests highest potential upside for ICICI Bank Ltd at 37 per cent and highest potential downside for PNB at 13 per cent.

Goldman Sachs has initiated coverage on YES Bank with a 'Sell' rating and a target of Rs 22, implying a 3.3 per cent downside from the prevailing level. The same brokerage initiated coverage on Punjab National Bank (PNB) with a 'Sell' call and a target of Rs 103, suggesting a 13 per cent potential downside.

The foreign brokerage suggested 'Buy' on HDFC Bank with a target of Rs 861, suggesting 19 per cent potential upside. Axis Bank is rated 'Buy' with a target of Rs 1,477, implying 18 per cent potential upside. Federal Bank is also raised 'Buy with a target of Rs 425 and an implied upside of 20 per cent.

The highest upside among banks is seen on ICICI Bank Ltd where Goldman Sachs' target of Rs 1,935 suggests 37 per cent potential upside. Two stocks IndusInd Bank Ltd and IDFC First Bank Ltd are rated 'neutral'. For IDFC First Bank, Goldman Sachs initiated coverage with a target of Rs 92, suggesting 7.2 per cent upside. IndusInd Bank's target of Rs 1,020 implied a mere 1.2 per cent potential upside. Meanwhile, Kotak Mahindra Bank is rated 'Buy' with a target of Rs 509. The target suggests 28 per cent upside.

Overall, the Goldman Sachs brokerage initiated coverage on 14 banks, with profitability and return on asset (ROA) normalisation seen as key drivers of stock performance. The framework focused on earnings acceleration, franchise strength & valuation.