HDFC Bank, ICICI, IndusInd, RBL, Bandhan, Axis, KVB, IDFC First, Federal Bank: Target prices
The valuation premium of mid-private banks versus larger private banks has risen sharply and Elara said it would rather be selective in its approach. Within PSU banks, it prefers State Bank of India and Bank of Baroda.
- Jun 9, 2026,
- Updated Jun 9, 2026 9:20 AM IST
Elara Securities in a fresh note on banking sector said despite challenges and near-term uncertainties, trends are resilient for MSMEs. Dislocations via elevated costs, logistics pressures and tighter working capital cycles, in case there is a prolonged crisis in West Asia, will continue to be the key monitorables going ahead, the domestic brokerage said.
"Navigating through these challenges will cause uncertainties, which are difficult to pencil in yet. Having said that, juxtaposing fundamentals with valuations, we believe large private banks offer the best risk-reward. Even as, large private banks seem to lag near-term positive catalysts, they offer good earnings compounding in the near term," Elara Securities said.
The valuation premium of mid-private banks versus larger private banks has risen sharply and Elara said it would rather be selective in its approach. Within PSU banks, it prefers State Bank of India and Bank of Baroda.
Among large private lenders, Elara has 'Buy' on HDFC Bank (target: Rs 976), ICICI Bank (target: Rs 1,783), Axis Bank (target: Rs 1,629) and Kotak Mahindra Bank Ltd (target: 473), suggesting 25-42 per cent potential upsides.
The brokerage has 'Accumulate' rating on IndusInd Bank (target: Rs 940), Federal Bank (Rs 315), RBL Bank (Rs 345), IDFC First Bank (Rs 78) and Bandhan Bank (Rs 220) suggesting nil to 9 per cent potential returns. City Union Bank (target: Rs 345) and Karur Vysya Bank (Rs 345) are 'Buy' with targets suggesting 39.7 per cent and 22.6 per cent potential upsides.
In the PSU space, SBI (Rs 1,209), PNB (Rs 125), BoB (Rs 314) and Canara Bank (Rs 129 )are 'Accumulate' calls while Indian Bank (Rs 830) is rated 'Sell'.
Citing CrifHighmark (Commercial Bureau data), Elara said MSME portfolio of banks reached Rs 46 lakh crore (up 12.8 per cent YoY) with active loans at 1.92 crore (up 2.4 per cent YoY). However, the momentum seems to have slowed down in the recent months, it said.
"Just to elucidate, the portfolio grew 3.1 per cent in December 2025 to April 2026 versus 9.7 per cent same time last year. Moreover, active loans dropped 3.5 per cent between December 2025 and April 2026, versus 3 per cent growth in the same period last year. Within segments, the drop was sharper in the micro segment (sub-Rs 2 crore ticket size). In terms of industry, shipping & transport, food processing, and auto & ancillaries were the subsectors that saw the sharpest declines. From a lender’s perspective, activity moderated across segments with softer traction on NBFCs and PSU bank," it said.
Elara Securities in a fresh note on banking sector said despite challenges and near-term uncertainties, trends are resilient for MSMEs. Dislocations via elevated costs, logistics pressures and tighter working capital cycles, in case there is a prolonged crisis in West Asia, will continue to be the key monitorables going ahead, the domestic brokerage said.
"Navigating through these challenges will cause uncertainties, which are difficult to pencil in yet. Having said that, juxtaposing fundamentals with valuations, we believe large private banks offer the best risk-reward. Even as, large private banks seem to lag near-term positive catalysts, they offer good earnings compounding in the near term," Elara Securities said.
The valuation premium of mid-private banks versus larger private banks has risen sharply and Elara said it would rather be selective in its approach. Within PSU banks, it prefers State Bank of India and Bank of Baroda.
Among large private lenders, Elara has 'Buy' on HDFC Bank (target: Rs 976), ICICI Bank (target: Rs 1,783), Axis Bank (target: Rs 1,629) and Kotak Mahindra Bank Ltd (target: 473), suggesting 25-42 per cent potential upsides.
The brokerage has 'Accumulate' rating on IndusInd Bank (target: Rs 940), Federal Bank (Rs 315), RBL Bank (Rs 345), IDFC First Bank (Rs 78) and Bandhan Bank (Rs 220) suggesting nil to 9 per cent potential returns. City Union Bank (target: Rs 345) and Karur Vysya Bank (Rs 345) are 'Buy' with targets suggesting 39.7 per cent and 22.6 per cent potential upsides.
In the PSU space, SBI (Rs 1,209), PNB (Rs 125), BoB (Rs 314) and Canara Bank (Rs 129 )are 'Accumulate' calls while Indian Bank (Rs 830) is rated 'Sell'.
Citing CrifHighmark (Commercial Bureau data), Elara said MSME portfolio of banks reached Rs 46 lakh crore (up 12.8 per cent YoY) with active loans at 1.92 crore (up 2.4 per cent YoY). However, the momentum seems to have slowed down in the recent months, it said.
"Just to elucidate, the portfolio grew 3.1 per cent in December 2025 to April 2026 versus 9.7 per cent same time last year. Moreover, active loans dropped 3.5 per cent between December 2025 and April 2026, versus 3 per cent growth in the same period last year. Within segments, the drop was sharper in the micro segment (sub-Rs 2 crore ticket size). In terms of industry, shipping & transport, food processing, and auto & ancillaries were the subsectors that saw the sharpest declines. From a lender’s perspective, activity moderated across segments with softer traction on NBFCs and PSU bank," it said.