SBI, ICICI Bank, Kotak Bank, Federal Bank: Axis Direct finds valuations attractive; shares price targets
NIFTY PSU Bank index has fallen 16% against the NIFTY Private Bank index, which slid 14.5% over the same period.
- Mar 24, 2026,
- Updated Mar 24, 2026 3:22 PM IST
The ongoing war in West Asia has adversely affected sentiment in Indian banking and financial sector (BFSI) stocks. Bank Nifty has tanked 15% from the start of the West Asia war till date. Within the banking pack, PSU banks have witnessed a slightly higher correction against their private peers.
Specifically, NIFTY PSU Bank index has fallen 16% against the NIFTY Private Bank index, which slid 14.5% over the same period.
Talking about banks and NBFCs, a prolonged war would keep oil prices higher, causing growth derailment with demand-led headwinds surfacing. Corporate capex plans, especially for oil-sensitive sectors, could be deferred.
Axis Direct in its report said, "In a scenario of an extended war, higher inflation would result in narrowing the room for any potential rate cut the RBI would have otherwise undertaken. Intense competition among banks for deposits to support the buoyancy in credit growth could result in cost of funds being driven higher, thereby hurting margins for lenders."
Furthermore, the brokerage sees near-term pressure on treasury income for PSU Banks given the rising G-Sec yields.
The brokerage favours banks with superior liability franchises and healthy CASA ratios and deposit granularity.
"We maintain a constructive outlook on the banking sector with valuations turning attractive post the sharp correction for most private banks, especially the larger names. Asset quality remains a position of strength, with credit costs trend remaining benign and near-term impact of the conflict on asset quality being largely insignificant."
"We adopt a nuanced stance on the NBFC sector, and take a selective preference towards financiers with attractive valuations, adequate capitalisation and healthy growth visibility. However, for both banks and NBFCs, we remain vigilant regarding the pressures posed by the geopolitical headwinds in West Asia, which could disrupt growth momentum, impact NIMs and weigh on the asset quality of lenders. Our preferred picks are: Banks: ICICI Bank, Kotak Mahindra Bank, State Bank of India, Federal Bank, AU Small Finance Bank, and Ujjivan Small Finance Bank NBFCs: Shriram Finance, Bajaj Finance, and Can Fin Homes," said Axis Direct.
The brokerage expects an upside of 39% in the ICICI Bank stock in a year with a price target of Rs 1700.
Kotak Mahindra Bank shares are expected to reach a price target of Rs 515, an upside of 45% from the current level. SBI stock is seen rising 31% to Rs 1,350 in a year.
Shares of Federal Bank can reach a price target of Rs 320, rising 26% during the period. AU Finance Bank shares can reach a price target of Rs 1,160, rising 37% in a year. Ujjivan Small Finance Bank stock is seen rising 45% to Rs 74 in a year.
Coming to NBFCs, Bajaj Finance stock is expected to reach Rs 1,150, rising 42% in a year. Shri Ram Finance shares are set for a 37% upside at Rs 1,200. Another NBFC stock Can Fin Homes is seen rising 37% to Rs 1,125 in a year, according to Axis Direct.
The ongoing war in West Asia has adversely affected sentiment in Indian banking and financial sector (BFSI) stocks. Bank Nifty has tanked 15% from the start of the West Asia war till date. Within the banking pack, PSU banks have witnessed a slightly higher correction against their private peers.
Specifically, NIFTY PSU Bank index has fallen 16% against the NIFTY Private Bank index, which slid 14.5% over the same period.
Talking about banks and NBFCs, a prolonged war would keep oil prices higher, causing growth derailment with demand-led headwinds surfacing. Corporate capex plans, especially for oil-sensitive sectors, could be deferred.
Axis Direct in its report said, "In a scenario of an extended war, higher inflation would result in narrowing the room for any potential rate cut the RBI would have otherwise undertaken. Intense competition among banks for deposits to support the buoyancy in credit growth could result in cost of funds being driven higher, thereby hurting margins for lenders."
Furthermore, the brokerage sees near-term pressure on treasury income for PSU Banks given the rising G-Sec yields.
The brokerage favours banks with superior liability franchises and healthy CASA ratios and deposit granularity.
"We maintain a constructive outlook on the banking sector with valuations turning attractive post the sharp correction for most private banks, especially the larger names. Asset quality remains a position of strength, with credit costs trend remaining benign and near-term impact of the conflict on asset quality being largely insignificant."
"We adopt a nuanced stance on the NBFC sector, and take a selective preference towards financiers with attractive valuations, adequate capitalisation and healthy growth visibility. However, for both banks and NBFCs, we remain vigilant regarding the pressures posed by the geopolitical headwinds in West Asia, which could disrupt growth momentum, impact NIMs and weigh on the asset quality of lenders. Our preferred picks are: Banks: ICICI Bank, Kotak Mahindra Bank, State Bank of India, Federal Bank, AU Small Finance Bank, and Ujjivan Small Finance Bank NBFCs: Shriram Finance, Bajaj Finance, and Can Fin Homes," said Axis Direct.
The brokerage expects an upside of 39% in the ICICI Bank stock in a year with a price target of Rs 1700.
Kotak Mahindra Bank shares are expected to reach a price target of Rs 515, an upside of 45% from the current level. SBI stock is seen rising 31% to Rs 1,350 in a year.
Shares of Federal Bank can reach a price target of Rs 320, rising 26% during the period. AU Finance Bank shares can reach a price target of Rs 1,160, rising 37% in a year. Ujjivan Small Finance Bank stock is seen rising 45% to Rs 74 in a year.
Coming to NBFCs, Bajaj Finance stock is expected to reach Rs 1,150, rising 42% in a year. Shri Ram Finance shares are set for a 37% upside at Rs 1,200. Another NBFC stock Can Fin Homes is seen rising 37% to Rs 1,125 in a year, according to Axis Direct.