The banking and financial sector is in focus and the latest report by Jefferies identifies 11 potential stocks with stong upside potential, as much as 33% for some. The list coveres several large private lenders as well as key PSU names.
The brokerage has assigned Buy ratings to most private banks under its coverage. Here is a detailed analysis of its investment rationale for each bank
Jefferies on HDFC Bank: ‘Buy’
Jefferies has set a target price of Rs 1,240 for HDFC Bank, implying a 24% upside from current levels. The brokerage’s view rests on the bank’s profitability metrics, capital position and ability to absorb the integration impact of the HDFC merger over time. The valuation table shows HDFC Bank trading at relatively moderate multiples against expected return ratios, giving Jefferies confidence that medium-term re-rating is feasible as deposit growth stabilises.
Jefferies on ICICI Bank: ‘Buy’
ICICI Bank carries a target of Rs 1,760, indicating a 29% upside. Jefferies notes that the bank maintains strong return ratios and a comfortable balance sheet, allowing it to compound earnings steadily. Among large banks, ICICI’s valuation still leaves room for appreciation relative to its profitability trajectory. The brokerage sees the franchise as structurally well-positioned in retail and SME lending, with stable asset quality serving as a buffer.
Jefferies on Axis Bank: ‘Buy’
Axis Bank’s target price stands at Rs 1,430, translating into a 13% potential upside. Jefferies’ stance reflects the bank’s post-Citi integration efforts, improving liability profile and consistent credit cost management. While the upside is lower than that of some peers, the brokerage believes Axis remains a reliable beneficiary of industry-wide credit demand, particularly on the retail and corporate side.
Jefferies on Kotak Bank: ‘Buy’
Kotak Mahindra Bank is projected to reach Rs 2,650, offering a 27% upside. Jefferies’ approach here is linked to the bank’s potential strategic options, including possible M&A plays highlighted in the broader report. The bank’s discipline in credit selection and strong capital buffers give it room to pursue inorganic opportunities. The valuation multiple remains elevated, but the brokerage expects improvement as management transitions settle.
Jefferies on IndusInd Bank: ‘Buy’
IndusInd Bank has a target of Rs 920, representing a 10% upside. Jefferies places particular emphasis on the bank’s fresh leadership setup and its ability to drive a more balanced deposit mix. The brokerage sees it as a turnaround candidate, and the sector report separately names IndusInd as its preferred revamp play. The upside may look modest, but the re-rating argument lies in operational execution rather than market exuberance.
Jefferies on IDFC First Bank: ‘Buy’
IDFC First Bank is assigned a target of Rs 85, implying 9% upside. Jefferies’ view stems from the bank’s ongoing transition toward retail-dominated lending and its improving cost of funds. The upside is restrained because valuations have already compressed future expectations, but the brokerage believes the long-term structural shift remains intact.
Jefferies on Bandhan Bank: ‘Buy’
Bandhan Bank carries the highest upside in the entire list at 33%, based on a target of Rs 200. Jefferies’ rationale ties back to Bandhan’s ongoing effort to rebalance its portfolio away from concentrated microfinance exposures. The brokerage sees headroom for improvement as credit quality stabilises and deposit traction improves. Given the stock’s past volatility, Jefferies’ bullish call stands out for its conviction in management’s recalibration efforts.
Jefferies on AU Small Finance Bank: ‘Buy’
AU SFB has been given a target of Rs 940, leaving 2% upside. Jefferies recognises the strength of AU’s liability franchise and the disciplined build-out of its lending book, but the current valuation leaves little room for re-rating. The brokerage’s Buy rating is tied to the bank’s consistency rather than valuation-driven gains.
Jefferies on State Bank of India: ‘Buy’
Among PSUs, SBI secures a Buy rating with a target of Rs 1,140, reflecting a 17% upside. Jefferies’ call is supported by the bank’s return ratios, its strong capital base and the continued scaling of retail and digital channels. SBI remains the dominant lender in the system, and the brokerage expects that operational stability and credit demand will keep earnings momentum intact.
Jefferies on Bank of Baroda: ‘Hold’
Bank of Baroda is the only major institution in this matrix with a Hold rating. Jefferies sets a target of Rs 295, which indicates 5% upside. The limited appreciation potential comes from the bank’s already-expanded valuation relative to recent earnings performance. While asset quality and growth are stable, Jefferies holds the view that the stock’s near-term re-rating scope is largely exhausted.
Jefferies on Punjab National Bank: ‘Buy’
PNB has a target of Rs 135, pointing to an 11% upside. Jefferies notes that the bank’s asset quality repair cycle has progressed, though risks remain. The rating shows the possibility of steady improvement as provisions normalise and credit growth picks up. Relative valuation also keeps the stock attractive in the brokerage’s matrix.