Archive · 17 Nov 2025
Axis Securities Names Five Top Banking Stocks to Buy
Axis Securities, a financial services firm, has picked five banks they believe are good investments.
They say that after the second quarter results for the financial year, the banking industry is doing much better.
Banks are lending more money, and their profits are improving.
They also expect banks to make more money from loans in the coming years.
This is because they are managing their deposits well, which helps them keep more profit from loans.
Also, fewer people are struggling to pay back loans.
Axis Securities has given a 'buy' recommendation for HDFC Bank, Kotak Mahindra Bank, State Bank of India, Federal Bank, and Ujjivan Small Finance Bank, and has set target prices for each.
Axis Securities recommends five banking stocks: HDFC Bank, Kotak Mahindra Bank, SBI, Federal Bank, and Ujjivan Small Finance Bank.
The banking sector delivered robust earnings in Q2 FY26, surpassing expectations and indicating a stronger performance ahead.
Key growth drivers include an 11% YoY credit growth and improved fee income, with PSU banks outperforming private peers.
Net Interest Margins (NIMs) are expected to recover due to better deposit costs and a shift towards higher-yielding loan segments.
Asset quality is improving, with lower slippages, especially in unsecured loan portfolios, leading to moderating credit costs.
- Who
- Axis Securities
- What
- Identified five banking stocks with a 'Buy' rating following robust Q2 FY26 results and a positive sector outlook.
- When
- Following Q2 FY26 results.
- Where
- Not specified, but refers to the Indian banking sector.
- Why
- The banking sector has shown a strong performance in Q2 FY26, with improving credit growth, strengthening deposit growth, bottoming out NIMs, controlled expenses, and reduced slippages. This indicates the sector has moved past its soft patch from the first half of the fiscal.
Axis Securities Perspective
General Market Conditions
Credit Growth
Axis Securities Perspective
Axis Securities forecasts a 14% CAGR credit growth over FY26–28E for the banking sector.
General Market Conditions
The banking sector has achieved 11% YoY and 4% QoQ credit growth in Q2 FY26, with retail and secured SME segments being the main drivers.
Net Interest Margins (NIMs)
Axis Securities Perspective
Axis Securities expects NIM recovery to continue as deposit repricing benefits flow through and higher-yielding portfolios regain traction.
General Market Conditions
Banks have defended margins more effectively than expected due to stronger deposit growth and disciplined mix management.
Asset Quality
Axis Securities Perspective
Axis Securities anticipates continued moderation in credit costs due to encouraging asset quality trends in both secured and unsecured portfolios.
General Market Conditions
Slippages have been meaningfully lower, especially in unsecured portfolios where stress has started to ease.
- Recommended Stocks
- HDFC Bank, Kotak Mahindra Bank, State Bank of India (SBI), Federal Bank, Ujjivan Small Finance Bank
- Analyst Firm
- Axis Securities
- Time Period
- Q2 FY26 Results and FY26-28E Outlook
- Overall Sector Outlook
- Strongest visibility in several quarters, led by improving NIM trajectory, growth vectors, easing risk metrics, and stable regulatory frameworks.
- HDFC Bank Target Price
- ₹1,170
- Kotak Mahindra Bank Target Price
- ₹2,575
- SBI Target Price
- ₹1,135
- Federal Bank Target Price
- ₹265
- Ujjivan SFB Target Price
- ₹60
