Archive · 24 Aug 2026
Bernstein Sees Strong Upside in Select Indian Banks
Bernstein is a brokerage firm that studied several large Indian banks.
It said banks are giving more loans than they have in more than four years.
More money is available in the financial system, which may help banks earn better margins.
Bad loans are still under control, according to the report.
Bernstein believes private banks may gain ground against public-sector banks.
It gave HDFC Bank the largest possible rise among the six stocks it reviewed.
It was less positive about State Bank of India and expected IndusInd Bank to decline slightly.
Inflation, trade problems, world events and changes in interest rates could still hurt bank growth.
Bernstein said Indian bank loan growth reached a more-than-four-year high as industrial, services and selected retail lending recovered.
Improving liquidity, stabilising rates and contained bad loans are easing pressure on margins and credit costs.
Private banks are narrowing their loan-growth gap with public-sector banks and have stronger deposit growth, according to Bernstein.
HDFC Bank received the highest target of Rs 1,150, implying 56.7% upside, while IndusInd Bank’s target implies 1.5% downside.
Bernstein expects healthy banking-sector growth in FY27 but cited inflation, trade deficits, geopolitical uncertainty and monetary-policy changes as risks.
- Who
- Global brokerage house Bernstein and six Indian banks: HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, State Bank of India and IndusInd Bank.
- What
- Bernstein published targets for six banking stocks, projecting upside ranging from 14% to 57% for five stocks and a 1.5% downside for IndusInd Bank.
- When
- The assessment covers the latest quarter and Bernstein’s outlook for financial year 2027.
- Where
- India.
- Why
- Loan growth is accelerating, liquidity is improving, margins are stabilising and bad loans remain contained, although several macroeconomic risks remain.
Private-Bank Growth Case
Public-Bank and Sector Risks
Loan and deposit growth
Private-Bank Growth Case
Private-sector banks are narrowing their loan-growth gap with public-sector banks, while stronger deposit growth may help them gain market share.
Public-Bank and Sector Risks
Public-sector banks have recently benefited from favourable loan-mix changes, but Bernstein believes their growth advantage may be difficult to sustain.
Funding and margins
Private-Bank Growth Case
Improving liquidity, stabilising lending and deposit rates, and reduced deposit repricing pressure could support private-bank margins.
Public-Bank and Sector Risks
Public-sector banks’ greater reliance on borrowings could weigh on their relative margin performance.
Investment outlook
Private-Bank Growth Case
Bernstein sees substantial potential in HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Axis Bank based on its target prices.
Public-Bank and Sector Risks
The view is more measured on State Bank of India, while IndusInd Bank is the only stock in the group whose target implies a decline; broader risks include inflation, trade deficits, geopolitical uncertainty and monetary-policy changes.
- Top pick by implied upside
- HDFC Bank; target price Rs 1,150 and implied upside of 56.7%.
- ICICI Bank target
- Rs 1,800, implying 31.1% upside.
- Kotak Mahindra Bank target
- Rs 500, implying 32.4% upside.
- Axis Bank target
- Rs 1,600, implying 14.8% upside.
- State Bank of India target
- Rs 1,300, implying 2.6% upside.
- IndusInd Bank target
- Rs 1,000, implying 1.5% downside.
- Sector outlook
- Bernstein expects healthy banking-sector growth in FY27, supported by liquidity and recovering nominal credit growth.