IndusInd, Bandhan Bank offer more value for your buck over larger peers; Jefferies recommends ‘Buy’

Jefferies has identified India’s smaller private banks as attractive due to their average valuations remaining attractive relative to larger private peers, despite recent outperformance. Small banks are trading at an average valuation of 1.9x, compared to the larger private banks’ average of 2.6x and large non-bank financial corporations’ average of 5.2x. As growth improves, valuations could see a positive rerating. Bandhan Bank and IndusInd Bank are Jefferies’ top buys, with the bank expecting higher funding costs and Non-Performing Loans in smaller private banks to be resolved, delivering better earnings momentum.