HDFC Bank Vs ICICI Bank: Which stock is a better ‘Buy’? Nuvama names top bets

HDFC Bank and ICICI Bank have both announced their Q1FY27 results on July 18 among a host of big banks that declared their Q1 results.

Now the focus has shifted to a key question. Which banking stock looks more attractive after the latest earnings?

Brokerage house Nuvama remains positive on both lenders and has retained the ‘Buy’ rating on HDFC Bank as well as ICICI Bank. However, the brokerage sees slightly higher upside potential for ICICI Bank based on its latest target prices.

What is driving Nuvama’s investment rationale and which bank offers stronger momentum going forward?

HDFC Bank Vs ICICI Bank: Which stock offers higher upside?

Following the June-quarter results, Nuvama has maintained a ‘Buy’ rating on both banking majors.

For HDFC Bank, the brokerage has retained a target price of Rs 1,025. This implies an upside potential of around 25% from the current market price.

For ICICI Bank, Nuvama has set a target price of Rs 1,850. This translates to an upside of nearly 28% from the current market price.

HDFC Bank: Growth remains steady despite a softer quarter

HDFC Bank’s June-quarter performance was relatively moderate, with pressure on margins and earnings compared with market expectations. Even so, according to the Nuvama report, the bank’s long-term growth story remains intact.

According to Nuvama, “HDFC Bank will be a key beneficiary of FCNR(B) deposit mobilisation, which should further support credit growth and also margins.”

Nuvama noted that loan growth continued to improve, led mainly by the corporate and Small and Medium Enterprise (SME) segments. Retail lending also showed signs of recovery, with stronger disbursements in vehicle loans, unsecured personal loans and gold loans.

Although the bank’s Net Interest Margin (NIM) declined during the quarter, Nuvama believes improving deposit mobilisation and foreign currency deposit inflows could help margins recover over the coming quarters.

Asset quality also remained stable despite seasonal pressure from agricultural loans.

“We stay constructive on large-cap PVBs in general and believe HDFC Bank’s strong franchise, robust capital/provision buffers and undemanding valuation offer an attractive risk-reward,” added the brokerage house Nuvama in its report.

However, Nuvama added that the stock’s re-rating could depend on greater clarity around the Managing Director’s tenure.

It noted, “Though HDFC Bank’s re-rating will be contingent on long awaited clarity on the MD’s term extension.”

ICICI Bank: Strong growth keeps momentum intact

ICICI Bank reported another strong quarter, supported by healthy loan growth, improving margins and stable asset quality.

As per Nuvama, “ICICI Bank reported yet another strong quarter with industry leading credit growth of 20% YoY.”

Corporate lending, business banking and rural loans remained the key drivers of growth, while retail segments such as mortgages, commercial vehicles and personal loans also continued to perform steadily.

Unlike many peers, ICICI Bank ICICI Bankalso reported a small sequential improvement in its Net Interest Margin, reflecting better pricing and stable funding costs.

Nuvama added, “Going ahead, management expects credit growth/margins to remain healthy benefiting from FCNR(B) deposit mobilisation.”

The brokerage also highlighted that gross non-performing assets declined further, while the bank continued to maintain strong provisioning buffers.

“ICICI Bank remains our top pick in the bank space given its system-beating credit growth, superior RoA/RoE delivery (2.2%/16% over FY27–29E), strong provision/capital buffers and credible management,” Nuvama report noted.

Nuvama expects the bank to continue benefiting from healthy business growth, disciplined cost management and stable profitability over the medium term.

Which bank does Nuvama prefer?

Both HDFC Bank and ICICI Bank continue to receive a ‘Buy’ recommendation from Nuvama.

HDFC Bank remains a long-term play on improving margins, deposit growth and gradual recovery in retail lending. At the same time, Nuvama believes ICICI Bank is better positioned due to its stronger credit growth, improving profitability, stable asset quality and consistent execution.

Disclaimer: Investment in the securities market is subject to market risks; read all the related documents carefully before investing. The target prices, ratings, and potential upside metrics mentioned in this report are sourced entirely from institutional brokerage research by Nuvama and do not reflect the independent valuation, endorsement, or editorial opinion of this publication. Individual stock performance depends on broader market dynamics, structural corporate changes, and regulatory micro-shifts; past performance or brokerage forecasts are not guaranteed indicators of future returns. Readers must not treat these analytical consensus models as a formal solicitation or a direct buy/sell mandate, and are strongly advised to consult a SEBI-registered research analyst or certified financial advisor to evaluate specific risk-reward profiles aligned with their personal investment objectives.  This disclaimer has been generated using AI to support user well-being and responsible content consumption.