Two of India’s largest private sector lenders – HDFC Bank and ICICI Bank reported their March quarter earnings (Q4FY26), and the street is closely tracking what comes next. The brokerage house Nuvama has maintained a positive stance on both, assigning ‘Buy’ ratings with meaningful upside potential.
The big question now is not just earnings, but sustaining the momentum – whether growth, margins and asset quality can hold steady in the coming quarters.
Let’s take a look a look at the key reasons why the brokerage is bullish on this two private lender and the rationale behind it –
Nuvama on HDFC Bank
Nuvama has maintained a ‘Buy’ rating on HDFC Bank, setting a target price of Rs 1,050. This implies an upside potential of around 31% from current levels.
- Growth outlook hinges on balance between loans and deposits
According to the Nuvama report, “HDFC Bank reported a miss on Net Interest Income (NII) and Pre-Provision Operating Profit (PPoP) in Q4FY26 due to lower interest income, however, beat on operating expenses (opex) and provisions led to higher Profit After Tax (PAT).”
The brokerage highlighted that deposit growth outpaced loan growth, which helped improve the Loan-to-Deposit Ratio (LDR).
It further noted that the bank gave more loans earlier, but now deposits are growing faster, so its balance between loans and deposits has improved. Also, the money it earns from lending (its margin) has gone up slightly to 3.38%, meaning it is making a bit more profit from its core business.
- Asset quality remains a key strength
One area where HDFC Bank continues to stand out is asset quality. Despite broader pressures, the bank has managed to keep its loan book healthy.
As per the brokerage report, “Asset quality remains best-in-class with Gross Non-Performing Asset (GNPA) ratio improving 9 basis points quarter-on-quarter.”
The report also pointed out that slippages declined and recoveries improved, which helped reduce overall credit costs.
It added, “Credit cost came in much lower at 36 basis points versus 41 basis points in Q3FY26 which led to PAT growing 9% year-on-year and 3% quarter-on-quarter.”
- Margins and earnings outlook remain under watch
Although margins saw a slight improvement, structural pressures remain. The brokerage flagged that changes in funding mix and deposit costs could limit margin expansion.
Nuvama in its report further noted that, “Structural pressures from faster asset yield transmission versus deposits keep margins range-bound.”
At the same time, the brokerage trimmed its earnings estimates and reduced valuation multiples, citing limited near-term triggers.
“We reiterate ‘Buy’ but cut FY27E EPS by 3% and reduce our target price and valuation multiple to Rs 1,050/2.3x BV FY27E from Rs 1,170/2.7x, given the sharp fall in stock and limited visibility of near-term rerating,” the report said.
Nuvama on ICICI Bank
For ICICI Bank, Nuvama has maintained a ‘Buy’ rating with a target price of Rs 1,670, implying an upside of around 24%.
- Earnings supported by lower provisions
According to the brokerage report, “ICICI’s PAT beat Q4 estimate driven by a sharp beat on provisions on the back of lower slippages, strong recoveries and higher write-backs from the written-off book.”
- Strong loan and deposit growth
The bank has continued to show healthy growth across both loans and deposits, which is crucial for long-term stability.
Nuvama in its report highlighted that the bank’s total loans grew 6% compared to the previous quarter and 16% over the past year. Retail loans increased 6% quarter-on-quarter and 11% year-on-year, business banking loans rose 8% QoQ and 24% YoY, while loans to domestic companies grew 3% QoQ and 9% YoY.
- Margins stable despite rate pressures
Margins remained stable even in a changing interest rate environment, which is seen as a positive.
As per the brokerage report on ICICI Bank, “NIM improved by 2 basis points quarter-on-quarter and is expected to remain range-bound at current levels.”
However, some pressure on yields was visible due to changes in lending rates and liquidity conditions.
- Asset quality shows steady improvement
ICICI Bank’s asset quality has improved further, strengthening its investment case.
The brokerage noted, “ICICI’s asset quality, already strong, improved further during the quarter, supported by better retail trends, a resilient corporate book and stable credit costs in a benign risk environment. Slippages declined 21% QoQ.”
What investors need to watch next
According to the brokerage report, both HDFC Bank and ICICI Bank remain strong plays in the banking space, but their near-term outlook differs.
HDFC Bank is dealing with short-term pressure on growth visibility and margins, even though its fundamentals remain intact.
ICICI Bank, on the other hand, is showing more consistent performance with improving asset quality and stable earnings.
Disclaimer: Investment decisions involving HDFC Bank and ICICI Bank should be based on your individual risk appetite and financial goals. The target prices and ratings mentioned are provided by Nuvama and do not constitute an offer or solicitation by this publication; we recommend consulting a SEBI-registered financial advisor before making any buy, sell, or hold decisions. Stock market investments are subject to market risks, and past performance is not a guarantee of future returns.
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