
Shares of major lenders HDFC Bank, ICICI Bank and State Bank of India (SBI) are in focus ahead of their December quarter earnings set to be announced in the near future. The three stocks are top picks of major brokerages as they share their outlook and Q3 earnings for Indian lenders. Global brokerage Jefferies likes private banks over PSU banks and larger banks over smaller banks. It has ICICI Bank, Axis Bank and HDFC Bank as its top picks. The brokerage has upgraded Kotak Mahindra Bank from Hold to Buy as it finds valuation are more reasonable.
Among public sector lenders, it continues to prefer SBI & has downgraded Bank of Baroda from Buy to Hold as its high loan-to-deposit ratio (LDR) and slower deposit growth may limit growth & rerating catalysts.
Here's a look at what brokerages said ahead of the earnings of HDFC Bank, ICICI Bank and SBI.
ICICI Bank
Motilal Oswal has a target price of Rs 1,550 for the lender.
"ICICI Bank has consistently delivered strong performance, achieving 17% CAGR in loans over FY22-FY24, driven by Retail, BB, and SME segments. The bank’s focus on leveraging data analytics for onboarding and credit assessment has been pivotal," said Motilal Oswal.
For Q3, Motilal Oswal expects business growth to remain healthy, cost ratios to remain elevated and margins likely to see a mild moderation. It expects asset quality ratio to be steady for the bank.
Jefferies has a price target of Rs 1,600 on ICICI Bank.
The global brokerage believes ICICI Bank is well-placed to deliver on growth and quality with healthy deposit growth and has lowest loan-to-deposit ratio (LDR) among private banks that can aid industry leading credit growth. It expects asset quality trends to be manageable as bank has focused on better rated customers in unsecured and SME loans.
"ICICI Bank is among our top picks with revised price target of Rs 1,600 (from Rs 1,550) based on 2.7 times December-26 adjusted PB & value of stake in subs," said Jefferies.
SBI
Motilal Oswal said SBI delivered consistent loan growth of 16% YoY in FY24 and 15.3% YoY in 1HFY25. Retail loans (36% of portfolio) grew modestly, with profit and loss showing recovery. "Corporate and SME segments have shown strong growth, with GNPA in SMEs reducing significantly to 3.6% in 2QFY25. A robust credit pipeline of Rs 6 trillion positions SBI for 14-15% growth, outpacing systemic credit expansion."
It has a target price of Rs 1,000 on the stock.
Motilal Oswal expects slightly elevated provisions in 3Q. It expects cost ratios to be slightly higher with asset quality expected to remain contained. Margins are expected to stay largely flat, added Motilal Oswal.
Jefferies has a price target of Rs 970 on SBI.
Jefferies believes SBI is well-placed to grow loans as leverages on lower LDR, improvement in deposit growth and stable asset quality.
The key deliverable for the management will be to improve deposit growth from 9% now towards 11-13% over next 12-18 months to aid sustainable credit growth, it said adding that valuations are reasonable at 1.3x FY26 adjusted PB and 10x PE. The brokerage rates the stock as Buy with revised price target of Rs 970 (from Rs 1,030) based on 1.4 Dec-26 adjusted PB & value of stake in subsidiary.
HDFC Bank
Motilal Oswal said HDFC Bank is navigating post-merger short-term challenges, including high CD ratios and inherited high-cost borrowings, with a strategic focus on deposit mobilization and balance sheet optimisation. It has a price target of Rs 2,050.
Motilal Oswal expects cost ratios to remain under control. Margins are likely to remain broadly stable. Asset quality is likely to remain broadly stable. Guidance for credit growth will be a key monitorable.
Jefferies has a price target of Rs 2120.
Jefferies believes HDFC Bank will continue to see softer credit growth as management tapers off LDR towards 90% mark by FY27 from 100%.
"We have factored 15% CAGR in deposits and 11% in loans over next three years and arrive at LDR of 92% by Mar-27. Having underperformed peers and the market, valuations are comparable with ICICI Bank (2.4x FY26 adjusted PB and 15x PE) so we now include it among our top-3 picks with Buy rating with revised price target of Rs 2,120 (from Rs2,020) based on 2.3 Dec-26 APB and value of stake in subs," said Jefferies.