Several banking sector stocks have shared their Q2 updates ahead of Q2 FY26 earnings. International brokerage firm Jefferies has maintained its ‘Buy’ rating on many of these banking stocks, seeing as much as 30% upside in select stocks.
Here is a detailed analysis of the stocks that Jefferies is bullish on and the investment rationale –
Jefferies on Kotak Mahindra Bank
Kotak Mahindra Bank showed the strongest momentum among the three banks selected by Jefferies. It has reported strong net loan growth of 16% YoY, while total deposits were stable at 15% YoY, supported by an 11% YoY increase in CASA deposits. Jefferies retained its Buy call on the stock, with a target price of Rs 2,550, implying an upside of 21% from current levels.
Jefferies on IndusInd Bank
IndusInd Bank witnessed significant consolidation, with loan growth declining 8% YoY in Q2 and total deposits falling 5% YoY, marked by a sharp 19% YoY drop in CASA deposits. The reason behind the decline in loan growth is largely due to a fall in corporate & MFI (Microfinance Institution) loans, said Jefferies. “While such consolidation was expected, a pick-up in business and fees will be key to profitability. They added that IndusInd Bank has taken sharper cuts in deposit rates, and this can aid margins Q3 onwards,” said the brokerage. This prompted Jefferies to keep the rating unchanged at Buy, with a target price of Rs 920, an upside of 23%.
Jefferies on Bandhan Bank
Bandhan Bank registered “softer growth,” achieving 7% YoY loan growth in Q2FY26, but its CASA deposits fell 6% YoY due to rate adjustments and shifts to term deposits. This reflects softer trends in MFI, partly compensated by stronger trends in retail segments. Collection efficiency in MFI loans remained stable at 97.8% (97.6% in Q1), which needs to improve to help reduce credit costs. “Better trends in the MFI segment will be key to growth & ROA,” said Jefferies. The brokerage maintained its ‘Buy’ rating, with a target price of Rs 215, implying an upside of 30% from current levels.