Axis Bank, HDFC Bank, Kotak Mahindra Bank: Which stock to buy after Q3 updates

A couple of large banks have come out with their December quarter business updates, including Axis Bank Ltd, HDFC Bank Ltd and Kotak Mahindra Bank Ltd (KMB). Following this, foreign brokerage Nomura kept a ‘Neutral’ stance on KMB, maintained ‘Buy’ on HDFC Bank, and highlighted Axis Bank as its top pick in the banking sector.

Axis Bank reported a deposits growth of 4.8 per cent quarter-on-quarter (QoQ) or 15 per cent year-on-year (YoY), which was better than the industry and Nomura's expectations. Loan growth was strong at 3.7 per cent QoQ or 14.2 per cent YoY, again,  better than the industry growth of 11.7 per cent YoY as of December 12, 2025.

HDFC Bank reported modest loan growth of 2.7 per cent QoQ or 9.8 per cent YoY. Net of loan sell-down, gross loan growth stood at 2.7 per cent QoQ  or 11.9 per cent YoY.
Deposit growth too was moderate during the quarter at 2.1 per cent QoQ or 11.5 per cent YoY, driven by 2.5 per cent QoQ (12.3 per cent QoQ) growth in term deposits and 1.2 per cent QoQ (10.1 per cent YoY) growth in CASA deposits.

Kotak Mahindra Bank said its net advances growth was strong at 16 per cent YoY or 3.8 per cent QoQ. Net advances (average) grew 16.2 per cent YoY  or 4 per cent QoQ. Total deposits (period-end) registered a healthy growth of 14.6 per cent YoY or 2.6 per cent QoQ.

On Axis Bank, Nomura said the private lender is on the right track in terms of growth, as the management maintained its stance of 300-400 bps above-industry-growth in steady state. 

"Our FY26F loan growth estimate stands at 14 per cent YoY, implying 2.4 per cent QoQ growth in 4QFY26F, with potential for upside. Credit cost has been elevated in FY26 to date, due to technical impact in Q1 and one- time standard asset provisioning on certain crop loans in Q2. We believe Axis Bank needs a clean quarter in terms of asset quality to bridge the valuation gap with larger peers," it said while suggesting a target of Rs 1,440.

Nomura has Axis Bank as its top pick in the sector.

On HDFC Bank, Nomura said  constrained deposit growth has weighed on loan growth this quarter as its CD ratio almost touched the 100 per cent mark. 

"Strong deposit mobilisation remains key for the bank to drive acceleration in loan growth going forward. Maintain Buy," it said while suggesting a target of Rs 1,120. 

In the case of Kotak Mahindra Bank, Nomura said KMB’s loan and deposit growth outlook remains robust, positioning the bank to deliver loan/deposit growth of 16.5 per cent YoY/14-15 per cent YoY in FY26F, the highest among large private banks. 

"NIMs and credit costs – where the bank underperformed peers in Q2FY26 – remain the key monitorables heading into the 3QFY26F results. Maintain Neutral," Nomura said while suggesting a target of Rs 2,200.