The announcements in the Budget 2025 were a relief for taxpayers and a boost for consumption. Despite this boost, the Banking, Financial Services and Insurance (BFSI) sector experienced significant stress post-Budget 2025. The NIFTY Bank and NIFTY financial services were down by 16 basis points and 21 basis points, respectively.
However, in this stress, investors can explore some blue-chip BFSI stocks that may be less affected by short-term volatility and have a strong fundamental outlook. Such investments provide an indirect hedge against market pressure. Read the article to know more.
BFSI sector post-Budget 2025
Some of the core reasons for the pressure on the BFSI stocks and indices after the Budget 2025 were as follows:
- Amidst the global pressure and slowed domestic consumption, the economic growth fell from 8.2% to 6.4% in FY 25.
- Overall, the stock market continued to crash post-Budget 2025 due to geo-political pressure. SENSEX was down by nearly 7%, and NIFTY 50 was down by 3%.
- The projected gross market borrowing for FY 26 increased by 5.7% as compared to FY 25.
However, this market volatility or crashes may be short-lived as significant reforms related to income tax, ease of doing business and customs duty are announced, which can boost the overall consumption in the economy. Therefore, investors can explore some fundamentally strong BFSI stocks that can earn returns in the long run.
BFSI stocks: Banking
Here are top banking stocks classified based on their market capitalisation and ranked based on their 1-year return on equity as of February 6, 2025.
| Particulars | Market Capitalisation (in ₹ crores) | Return on Equity | Price to Earnings (P/E) (in times) | Return on Assets |
| HDFC Bank | 13,25,855.6 | 17.1% | 19.0 | 1.9% |
| ICICI Bank | 8,92,858.6 | 18.8% | 18.1 | 2.1% |
| SBI Bank | 6,79,877.5 | 17.3% | 8.8 | 1.1% |
| Kotak Mahindra | 3,78,846.5 | 15.0 | 17.3 | 2.6% |
| Axis Bank | 3,13,128.1 | 18.4 | 15.0 | 1.8% |
ICICI Bank Ltd
It is one of the biggest names in private-sector banking. It has a network of more than 17000 ATMs and 6523 business centres. It provides a wide range of financial products for savings, payments and transactions, wealth creation, consumption, etc. The bank is adopting a more customer-centric approach towards addressing a wide range of customers. Its shares are trading at ₹1,267.7 as of February 5, 2025.
Financial Analysis
| Particulars | 9M FY 2025 | FY 2024 | FY 2023 |
| Operating Profit(in ₹ crores) | 47,971 | 58,122 | 49,139 |
| Earnings per share | ₹57.4 | ₹58.4 | ₹45.8 |
| Net Profit(in ₹ crores) | 34,597 | 40,888 | 31,896 |
| Debt to equity ratio (in times) | 0.25 | 0.30 | 0.37 |
Key Performance Highlights
- The company’s revenue has increased by more than 75% in the past 5 years.
- The net non-performing Assets (NPA) ratio has declined to 0.4% in FY 2024.
- The stock of ICICI Bank has surged by nearly 23% since the start of FY 24.
- Operating cash flow has significantly dipped to (3,771) crores in the past 3 years.
Axis Bank Ltd
Being India’s 3rd largest private bank, the company has been delivering consistent performance for the past decade. The bank has a domestic branch network of 5,377 and nearly 1590 virtual relationship managers. Moreover, the bank has extended its operations to 8 international centres.
Financial Analysis
| Particulars | 9M FY 2025 | FY 2024 | FY 2023 |
|---|---|---|---|
| Operating Profit(in ₹ crores) | 33,443.3 | 39,356.0 | 32,048 |
| Earnings per share | 91.1 | 85.4 | 35.1 |
| Net Profit(in ₹ crores) | 19,255 | 24,861 | 9,579 |
| Debt to equity ratio (in times) | 1.1 | 1.3 | 1.49 |
Key Performance Highlights
- The stock of Axis Bank has dropped by nearly 28% in FY 2025.
- The bank is widening its scope with ESG strategy, One Axis, Growth-Profitability-Sustability (GPS) strategy, etc.
- The operating cash flow has been in a declining trend since FY 22 and is (5,555) crores in FY 2024.
- Bank’s CASA (current account and savings account) has grown by nearly 24% in the past 3 years.
Peer Review
| Particulars | Net Interest Margin (Ind. avg = 3.9%) | Good/ Bad | Price to Book Value (in times) (Ind. avg = 1.12) | Good/ Bad | Gross NPA (Ind. avg = 2) | Good/ Bad |
| HDFC Bank | 3.4% | 👎 | 2.8 | 👎 | 1.4% | 👍 |
| ICICI Bank | 4.2% | 👍 | 3.4 | 👎 | 1.9% | 👍 |
| SBI Bank | 3.1% | 👎 | 1.6 | 👎 | 2.0% | 👎 |
| Kotak Mahindra | 4.9% | 👍 | 2.9 | 👎 | 1.5% | 👍 |
| Axis Bank | 4.0% | 👍 | 1.9 | 👎 | 1.4% | 👍 |
BFSI stocks: Financial Services
Here are the top financial services stocks classified based on their market capitalisation and ranked based on their 1-year return on equity as of February 6, 2025.
| Particulars | Market Capitalisation (in ₹ crores) | Return on Equity | Price to Earnings (P/E)(in times) | Return on Assets |
| Bajaj Finance | 5,27,171.4 | 22.0% | 33.0 | 4.4% |
| Bajaj Finserv | 2,84,820.5 | 15.2% | 33.2 | 3.3% |
| Jio Financials | 1,60,801.6 | 1.2% | 100.0 | 1.1% |
| Bajaj Holdings | 1,27,806.0 | 14.7% | 17.2 | 2.1% |
| Chola Finance | 1,16,818.5 | 20.1% | 28.7 | 5.4% |
Bajaj Finance Ltd
It is a Non-Banking Financial Company (NBFC), mainly operating in the advances and investment segment. Its network of 6.91 crore customers has bagged the position of number 1 NBFC in the country. Its shares are trading at ₹8,475.3 as of February 5, 2025.
Financial Analysis
| Particulars | 9M FY 2025 | FY 2024 | FY 2023 |
| Operating Profit(in ₹ crores) | 19,810 | 21,625 | 16,948 |
| Gross NPA | 1.1% | 0.3% | 0.2% |
| Net Profit (in ₹ crores) | 12,721 | 12,644 | 10,289 |
| Asset Under Management (AUM)(in ₹ crores) | 2,93,370 | 2,44,826 | 1,80,999 |
Key Performance Highlights
- The company’s net profit has been growing at nearly 22% CAGR for the past 5 years.
- The company enjoys the highest credit rating of AAA for its long-term lending.
- As of February 5, 2025, this BFSI stock is trading near its 52-week high in the market.
- The company is tapping potential rural areas with its B2C loans.
Cholamandalam Investment and Finance Ltd
A part of the Murugappa group, the entity has gained significant attraction among customers in recent years. The NBFC has a branch network of 1,577 branches across the nation. Moreover, it has a wide range of products designed for retail as well as business customers. As of February 5, 2025, its stock is trading at ₹1,388.
Financial Analysis
| Particulars | 9M FY 2025 | FY 2024 | FY 2023 |
| Operating Profit(in ₹ crores) | 4,031 | 5,904 | 4,449 |
| Gross NPA | 4.0% | 3.5% | 4.6% |
| Net Profit (in ₹ crores) | 2,991 | 3,422 | 2,666 |
| Asset Under Management (AUM)(in ₹ crores) | 1,74,567 | 1,53,718 | 1,12,782 |
Key Performance Highlights
- The company has been consistently generating potential return on equity for the past 5 years.
- Due to the growing supportive ecosystem for MSMEs in the country, Chola is consistently expanding its footfall in various parts of the sector.
- The company has a major emphasis on rural credit as it is an untapped credit geography in India.
- The balance sheet size of this NBFC has grown by nearly 184% in the past 5 years,
Peer Review
| Particulars | Net Profit Margin (Ind. avg = 56.1) | Good/ Bad | Price to Book Value (in times) (Ind. avg = 2.8) | Good/ Bad | EV/ EBITDA (in times) (Ind. avg = 25.7) | Good/ Bad |
| Bajaj Finance | 26.3% | 👍 | 6.1 | 👎 | 18.2 | 👍 |
| Bajaj Finserv | 14.1% | 👎 | 4.1 | 👎 | 12.4 | 👍 |
| Jio Financials | 86.5% | 👍 | 1.1 | 👍 | 79.1 | 👎 |
| Bajaj Holdings | 432.7% | 👍 | 2.1 | 👍 | 16.4 | 👍 |
| Chola Finance | 17.8% | 👎 | 5.4 | 👎 | 15.2 | 👍 |
BFSI stocks: Insurance
Here are top insurance stocks classified based on their market capitalisation and ranked based on their 1-year return on equity as of February 6, 2025.
| Particulars | Market Capitalisation (in ₹ crores) | Return on Equity | Price to Earnings (P/E) (in times) | Return on Assets |
| LIC India | 5,30,129.7 | 63.4% | 12.7 | 0.8% |
| SBI Life Insurance | 1,46,816.0 | 11.9% | 60.8 | 0.7% |
| HDFC Life Insurance | 1,36,638.3 | 11.3% | 78.2 | 0.5% |
| ICICI Lombard | 91,750.9 | 16.9% | 36.4 | 3.2% |
| ICICI Pru Life | 87,436.9 | 8.0% | 89.7 | 0.3% |
Life Insurance Company of India
This company is almost the synonym of life insurance for Indians. Its vast network of more than 14 lakh agents and experience of 72 years contributes to this success. LIC provides a wide range of specific life insurance products at an economic rate. The company’s share is trading at ₹842.6 as of February 5, 2025.
Financial Analysis
| Particulars | 6M FY 2025 | FY 2024 | FY 2023 |
| Premium Revenue (in ₹ crores) | 2,33,671 | 4,75,069 | 4,74,004 |
| GNPA | 1.7% | 2.0% | 2.5% |
| Net Profit (in ₹ crores) | 18,081 | 40,675 | 36,397 |
| Assets Under Management(in ₹ crores) | 55,39,516 | 51,21,887 | 43,97,205 |
Key Performance Highlights
- It covers 58% market share of the Indian life insurance segment as of FY 24.
- The recent announcement allowing 100% FDI investment in the insurance sector may pose a threat in the upcoming years.
- The company was successful in becoming debt-free.
- A low P/E-to-growth ratio indicates undervaluation and provides an opportunity for better scope.
ICICI Lombard General Insurance Company Ltd
Under the umbrella of ICICI Bank, Lombard is an insurance company generalising in general insurance such as fire, marine, crop, vehicle, etc. The network of 1.4 lakh agents has catalysed its growth. As of February 5, 2025, its share is trading at ₹1,854.6.
Financial Analysis
| Particulars | 9M FY 2025 | FY 2024 | FY 2023 |
| Operating Profit (in ₹ crores) | 2,672 | 2,577 | 1,264 |
| Gross direct premium growth | 10.3% | 17.8% | 17.0% |
| Net Profit (in ₹ crores) | 1,998 | 1,918 | 1,720 |
| Combined Ratio | 102.9% | 103.3% | 104.5% |
Key Performance Highlights
- The decreasing combined ratio indicates the company’s ability to earn more premiums than paying in the claims.
- The company’s balance sheet size has grown by nearly 25% in the past 3 years.
- The company is mainly focusing on the tier 2 and 3 cities.
- The company’s operating cash flow has been consistently positive and has grown by 5% in FY 2024.
Peer Review
| Particulars | Net Profit Margin (Ind. avg = 5.1) | Good/ Bad | Price to Book Value (in times) (Ind avg = 6.9) | Good/ Bad | EPS Growth (Ind. avg = 10.6) | Good/ Bad |
| LIC India | 4.8% | 👎 | 5.4 | 👍 | 13.6% | 👍 |
| SBI Life Insurance | 1.2% | 👎 | 8.9 | 👎 | 10.0% | 👎 |
| HDFC Life Insurance | 1.5% | 👎 | 8.6 | 👎 | 15.0% | 👍 |
| ICICI Lombard | 9.3% | 👍 | 6.5 | 👍 | 10.6% | 👍 |
| ICICI Pru Life | 0.5% | 👎 | 7.4 | 👎 | 4.4% | 👎 |
Summing up!
Post-Budget 2025, a weak performance was observed in the BFSI sector. In such a period, investing in the blue-chip stocks from the industry can help earn potential long-term returns. Investors can explore banking, financial services and insurance stocks to diversify their portfolios.
