Q2 earnings done for HDFC Bank, ICICI, other private lenders. What's next?
Benchmarks Nifty22,737.55-15.66FEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return18.32 % Invest NowFEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.45 % Invest NowEnter search…
Private banks delivered mixed Q2 FY27 earnings, prompting analysts to identify lenders with attractive valuations and flag those investors may want to avoid. HDFC Bank reported a 5% YoY rise in net profit to Rs 19,510 crore, largely in line with expectations, but its shares have fallen 6% since the results.
Major private banks, including HDFC Bank, ICICI Bank and Kotak Mahindra Bank, have reported their Q2 FY27 earnings, delivering a mixed bag of results. Against this backdrop, analysts have identified banks that offer attractive valuations and those investors may want to avoid.The Q2 earnings season for the private lenders accelerated on October 17 when HDFC Bank, ICICI Bank, Axis Bank and Yes Bank released their results for the July-September quarter of the ongoing financial year. India’s largest private lender HDFC Bank reported a 5% YoY rise in net profit to Rs 19,510 crore, delivering a largely in-line performance, although the market reaction was muted. The shares of the lender have dropped 6% since the earnings announcement.
ICICI Bank meanwhile reported a 20% year-on-year (YoY) increase in second-quarter profit to Rs 14,800 crore. Jefferies and Nuvama have ‘Buy’ ratings on the stock, while Bernstein maintained its ‘Outperform’ rating. The stock has however fallen marginally over the past one week.
Also read | ICICI Bank share price target after Q2 results: What are Jefferies, other analysts saying?
Axis and Yes Bank saw 38% and 65% profit growth, respectively, while the shares of the two private lenders have fallen up to 4% over the past five days. Kotak Mahindra Bank meanwhile released its results on October 24, reporting 29% YoY growth in net profit. International brokerages like Jefferies raised target prices and earnings estimates for the stock, leading to a positive momentum of more than 2% in the lender’s share price on Monday.
Live Events
Notably, the earnings print came after the RBI delivered its first interest rate hike in nearly four years, as anticipated and shifted its policy stance from ‘Neutral’ to ‘Calibrated tightening’.
Also read | RBI rate hike done. Now what’s ahead for bank stocks? Jefferies, other brokerages weigh in
How are market experts analysing the Q2 results?
Most private banks have reported in-line results, underpinned by strong loan growth, driven by demand across segments, robust deposit accretion due to better-than-expected FCNR deposits inflows, moderation in credit cost and slippages amid a benign credit environment, and sequential margin impact for banks with higher FCNR accretion, said Sunny Agrawal, Head of Fundamental Research at SBI Securities.Shrikant Chouhan, Head of Equity Research of Kotak Neo, noted that while Q2 earnings for private banks were broadly in line with expectations, margins remained a tad under pressure from excess liquidity, rate-cut pass-through and competition. “Asset quality remains largely controlled, though we will monitor the impact of drought in parts of India.”
What lies ahead for private banks?
Going ahead, Agrawal from SBI Securities feels that net interest margins (NIM) would remain under pressure as full FCNR impact flows through, partially offset by repo rate hike, before reviving from Q4 onwards. Chouhan also said that the focus will shift to margin recovery, deposit mobilisation and sustainable profitability. The recent rate hike could provide a tailwind, while FCNR-related margin pressures may take time to normalise.Asset quality is expected to remain stable, with all eyes on commentary regarding asset quality across drought-affected regions. Private bank stocks have corrected materially from their highs amid macroeconomic uncertainty and FII outflows. With valuations becoming attractive and loan growth remaining healthy, the risk-reward is improving, according to the analyst.
“We continue to remain constructive on ICICI Bank among large-cap, and Karur Vysya Bank among mid-tier,” Agrawal from SBI Securities said. Chouhan from Kotak Neo meanwhile prefers ICICI Bank, Axis Bank and HDFC Bank, with ICICI Bank as the firm’s top pick, backed by consistent execution, strong growth and disciplined underwriting. Axis offers recovery potential as credit costs moderate, while HDFC Bank offers longer-term upside, contingent on improving deposit mobilisation and profitability. “We favour selective accumulation of quality private banks,” he said.
Also read | Banks seek relief from sustainable lending norms for FCNR(B) loans
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onhdfc bankyes bankaxis bankkotak mahindra bankicici bankQ2 earningsHDFC BankICICIprivate lendersmarkets news
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onhdfc bankyes bankaxis bankkotak mahindra bankicici bankQ2 earningsHDFC BankICICIprivate lendersmarkets news
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth EditionWill oil turn into a lingering problem? Is the world economy, India, or the market prepared?
KYB and KYC: Business behind the wealth creator called ‘Divi’s Lab’ – Part 2, concluding
KYB and KYC: Business behind the wealth creator called “Divi’s Lab” – Part 1
The global business of promising more
One company, 2 words. Bond yield and CDS: Will they decide the fate of global markets?
Business of Odd Things: Inside an industry that farms fish that nobody is meant to eat
- 1
- 2
- 3
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET
Unlock Access to All Exclusives with ETPrime FREE TRIAL
15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers
Trial offer expiring in00 : 05 : 00
I'd rather pay ₹2599 nowUh-oh! This is an exclusive story available for selected readers only.
Worry not. You’re just a step away.
Prime Account Detected!
It seems like you're already an ETPrime member with
Login using your ET Prime credentials to enjoy all member benefits
Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.
Unlock ETPrime's Exclusive Stories Today!
Big Price Drop! Flat 40% Off
Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In nowOffer Exclusively For You
Save up to Rs. 700/-
ON ET PRIME MEMBERSHIP
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get Flat 40% Off
Then ₹ 1749 for 1 year
Avail OfferOffer Exclusively For You
ET Prime at ₹ 49 for 1 month
Then ₹ 1749 for 1 year
Avail OfferSpecial Offer
Get flat 40% off on ETPrime
Avail OfferAvail OfferClaim NowAlready a Member? Sign In nowNeed Assistance?
Connect with an ETPrime expert for personalized support and guidance
+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '' + h3 + '
' + h4 + '
- ' + listing + '
What’s Included with
ETPrime Membership
1Exclusive Insights That Matter
Uncover the truth with our investigative stories
Make strategic moves using the real-world case studies
Read industry-specific stories to identify emerging trends
Spot opportunities with in-depth insights that matter
Trump temper on H-1B visas is forcing Indians to do these things to stay put in US
What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.
Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?
The problem with lab grown diamonds
Why a falling rupee is a better option for the economy
A list of top 20 momentum stocks that have delivered massive returns in one year
2Invest Wisely With Smart Market Tools & Investment Ideas
Alpha Trade
Get daily trade ideas from SEBI-registered research analysts.
Investment Ideas
Grow your wealth with stock ideas & sectoral trends.
Stock Reports Plus
All-in-one stock research with Stock Score, peer comparison & key signals.
BigBull Portfolio
Get to know where the market bulls are investing to identify the right stocks.
Stock Analyzer
Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.
Market Mood
Analyze the market sentiments & identify the trend reversal for strategic decisions.
Stock Talk Live at 9 AM Daily
Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.
3Stay informed anytime, anywhere with ET ePaper
ePaper - Print View
Read the PDF version of ET newspaper. Download & access it offline anytime.
ePaper - Digital View
Read your daily newspaper in Digital View & get it delivered to your inbox everyday.
Wealth Edition
Manage your money efficiently with this weekly money management guide.
TOI ePaper
Read the PDF version of TOI newspaper. Download & access it offline anytime.
Deep Explainers
Explore the In-depth explanation of complex topics for everyday life decisions.
Health+ Stories
Get fitter with daily health insights committed to your well-being.
Personal Finance+ Stories
Manage your wealth better with in-depth insights & updates on finance.
5Enjoy Complimentary Subscriptions From Top Brands
Stream new documentaries from all across the world every day.
Stories you might be interested in
Figures reflect the source report and its stated period. This article is for information and is not investment advice.
