Should you buy HDFC Bank, ICICI Bank, Axis Bank stocks ahead of Q4 earnings?

HDFC Bank, ICICI Bank, Axis Bank share price targets: Country's leading private sector banks HDFC Bank, ICICI Bank  and Axis Bank have received 'buy' calls from brokerage Mirae Asset Sharekhan in the beginning of the Q4 earnings season. The brokerage expects stable margins for the banking sector. Sharekhan projects NII growth of 7.2% y-o-y, for its banking coverage as it expects NIMs on overall basis to remain flattish on a sequential basis.

Due to the US-Iran war, the brokerage expects a few hiccups in export-oriented or crude oil/gas sectors and input-dependent MSMEs. 

However, it expects the asset quality to remain stable with stress peaking out in personal loan, credit cards segments. 

Large private banks and PSU banks like SBI, Bank of Baroda, Bank of India, HDFC Bank, ICICI may report broadly flat margins (+/- 2 bps), says the brokerage addign that mid-sized banks such as City Union Bank and AUSFB with higher yielding lending exposures are likely to see sequential improvement in NIMs. 

The brokerage sees a healthy outlook for the banking sector in Q4 with aggregate loan growth expected at 14.5% y-o-y, driven primarily by PSU banks. 

NIMs are expected to be largely stable with few exceptions. Despite declining treasury profits and higher operating expenses, healthy fee income and benign credit costs will support a 5.2% y-o-y rise in profit after tax (PAT). 

Asset quality is broadly stable though emerging risks in MSME and export sectors from global trade tensions warrant caution.

Ahead of the Q4 earnings, the brokerage has buy calls on three large private banks. 

For HDFC Bank, the brokerage has a target price of Rs 1025 with a buy call. HDFC bank sharse were trading 1.50% higher at Rs 809.20 in the afternoon session today. Market cap of the lender stood at Rs 12.45 lakh crore. 

ICICI Bank stock, the brokerage believes could hit a target of Rs 1700 in a year. The banking stock was trading 3% higher at Rs  1320 today. Market cap of the lender stood at Rs 9.41 lakh crore. 

The brokerage has a target price of Rs 1490 with a buy call on Axis Bank. The stock was trading 2.52% higher at Rs 1351 in the afternoon session today. Market cap of the lender stood at Rs 4.20 lakh crore.