The renowned brokerage firm Bernstein has initiated coverage on three stocks in the Indian banking sector - Bajaj Finance Ltd, IndusInd Bank Ltd, and Muthoot Finance Ltd. It has recommended a 'Market-Perform' rating for Bajaj Finance and 'Outperform' ratings for IndusInd Bank and Muthoot Finance. Bernstein has identified the Indian banking sector as a "land of compounders" and highlights the strong credit growth, favorable asset quality, and healthy margins. While the large private sector banks continue to be top compounding stories, niche lenders such as non-bank financial companies (NBFCs) and housing finance companies (HFCs) also offer promising growth opportunities. Bernstein values each stock based on their earnings potential and target prices for investors.