HDFC Bank out, ICICI Bank, IndusInd, KMB among Nomura’s preferred picks

HDFC Bank Ltd is no longer among Nomura's preferred picks. The foreign brokerage likes ICICI Bank Ltd and Kotak Mahindra Bank among large banks. It likes IDFC First Bank Ltd, Federal Bank Ltd and IndusInd Bank within mid-tier banks. Nomura said it excluded HDFC Bank from its preferred picks largely on account of succession overhang. For now, it maintained a 'Buy' on HDFC Bank with a target of Rs 950.

Nomura's target on ICICI Bank stands at Rs 1,700. It has targets of Rs 460 on Kotak Mahindra Bank Ltd, Rs 95 on IDFC First Bank, Rs 395 on Federal Bank Ltd and Rs 1,145 on IndusInd Bank Ltd, data compiled from Bloomberg suggested.

As far as the banking sector is concerned, Nomura said June quarter showed sustained system credit growth momentum over and above a strong March quarter, notwithstanding seasonal weakness. It expects loan growth momentum to continue through H1FY27 on the back of strong demand, support from FCNR deposits and a favorable base, before gradually moderating to 15 per cent YoY by FY27.

Nomura said system credit growth was strong at 19.3 per cent YoY in July, though this was driven by a lower base. Incremental month-on-month system credit growth stood at 1.3 per cent in July, led by retail and services segments. On a month-on-month (MoM) basis, gold loans (3 per cent MoM) and vehicle loans (1.4 per cent MoM) drove retail growth while trade (1.6 per cent MoM) and loans to NBFCs (0.8 per cent MoM) supported services growth. Nomura noted that growth momentum YoY was led by services (23 per cent) and industry (20 per cent), followed by retail (20 per cent) and agri (17 per cent).

Gold loans (88 per cent YoY), loans to NBFCs (36 per cent YoY), and MSME loans (25 per cent YoY) were leading sub-segments while housing and unsecured retail growth was muted at 11.3 per cent and 12.7 per cent, respectively.