Suresh Ganapathy, banking analyst at Macquarie Capital Securities, on Tuesday, said that Indusind Bank is one of the biggest dark horses.

The earnings season has ended at least for the big banks and it has been a story of lower loan growth and higher slippages, but not as bad as perhaps the market feared looking at the second surge of COVID-19.

Speaking in an interview with CNBC-TV18, Ganapathy said, “IndusInd Bank is one of the biggest dark horses. A lot of the things has gone right for them; they have recalibrated their entire balance sheet, focusing more on the liability base. It’s just a matter of time, the valuations could still have a further leg for rerating at this point in time. So, if there is one dark horse which I would like to place my bet on, it would be IndusInd Bank.”

According to him, HDFC Bank and Kotak Mahindra Bank already have high ROAs. “HDFC Bank and Kotak are already at a high level of return on assets (ROA) of about 1.8-2 percent. It's ICICI, which is moving on from 1.3 to 1.7-1.8; expected over the course of the next couple of years and the same is the case with SBI, moving from an almost zero percent ROA kind of a level now, expected to touch 1-1.1 percent over the course of next couple of years. So the market is playing for delta purely rewarding these companies where they are seeing significant improvement in fundamentals as a result which the price-performance itself speaks for these two stocks (ICICI and SBI),” said Ganapathy.

On the privatisation agenda, he said, “I really don't think the government's privatisation agenda is going to gain traction; they are going to struggle to do privatisation of an IDBI or Bank of Maharashtra, Central Bank of India. Look at the banks which are being big, not necessarily great banks to private, what will happen to them. If the privatisation agenda fails, eventually, again, the scapegoats are going to be the public sector banks.”

For the entire interview, watch the video

(Edited by : Abhishek Jha)