ICICI Bank, SBI, HDFC Bank, PNB, BoB, Kotak Bank: Price targets for top banking stocks

India’s banking sector is likely to see healthy earnings momentum in FY27, helped by strong credit demand, improving deposit growth and clean balance sheets, according to a report by Ashika Institutional Equities. It said banking system non-food credit growth and deposit growth stood at 18.6 per cent year-on-year (YoY) and 13.3 per cent YoY, respectively, as on June 30, 2026.

Credit growth at its highest level in more than a decade after adjusting for the ex-HDFC merger. Ashika said system credit growth is expected to remain healthy, supported by broad-based demand across secured retail, MSME, services and select corporate segments.

Citing its India thematic note dated June 23, 2026, Ashika said Chief Economic Strategist Dr Shubhada M Rao expects system credit growth at about 15 per cent in FY27. The brokerage added that improving deposit mobilisation should help banks sustain growth while maintaining underwriting discipline.
 

Liquidity and growth outlook
Referring to RBI Governor Sanjay Malhotra’s February 6, 2026 interview, Ashika said greater weight was given to banks’ LCR and NSFR ratios than to their credit-deposit ratios as measures of liquidity. Based on existing liquidity buffers, Ashika calculated a minimum headroom of 2-7 per cent  for expansion in banks’ credit-deposit ratios.
 

FCNR(B) window
Ashika said tightness in domestic deposit mobilisation has increased the importance of alternative funding sources. In this backdrop, the RBI’s special FCNR(B) deposit window could help banks mobilise foreign currency deposits, supplement domestic deposit growth and support balance-sheet expansion.

Ashika estimates inflows of US$50 billion through FCNR(B) deposits by September 2026, contributing about 1.8 per cent  to system deposit growth. It said HDFC Bank, Axis Bank, SBI, Bank of Baroda, ICICI Bank and Federal Bank are likely to be key beneficiaries, with FCNR(B) fund-raising expected to add 1-3 per cent  to their deposit growth in FY27.
 

Margins and earnings
According to Ashika’s house view, the RBI may raise the repo rate by 25-50 basis points in the second half of FY27. Ashika said this would benefit large private sector banks with a higher share of EBLR-linked loans in the 50-80 per cent  range.

It added that the RBI’s FCNR(B) zero-cost swap window could support margins by giving banks access to lower-cost funding and easing deposit mobilisation pressures. In Ashika’s view, stronger core net interest income should offset lower treasury income and support healthier earnings growth.
 

Asset quality and picks
Ashika said gross non-performing assets of scheduled commercial banks stood at 1.8 per cent  in March 2026, with net non-performing assets at 0.4 per cent, marking a multi-decadal low. It attributed this to contained slippages across corporate, retail and SME portfolios, easing stress in unsecured retail and MFI, and healthy provision buffers.

Ashika, however, said MSME asset quality remains a key monitorable after CRIF Highmark data showed public sector banks’ PAR 31-90 DPD in MSME rose from 2.7 per cent  in March 2026 to 3 per cent  in April 2026.

Ashika’s top picks are HDFC Bank (Target Price: Rs 1,061), followed by SBI (Target Price: Rs 1,276), Axis Bank (Target Price: Rs 1,663), City Union Bank (Target Price: Rs 280) and Karur Vysya Bank (Target Price: Rs 373), while Bandhan Bank (Target Price: Rs 271) and Bank of Baroda (Target Price: Rs 316) were identified as possible dark horses. All these stocks have a 'buy' rating from Ashika.

It has also has a 'buy' rating on ICICI Bank (Target Price: Rs 1,644), IndusInd Bank (Target Price: Rs 970), Kotak Mahindra Bank (Target Price: Rs 465), Federal Bank (Target Price: Rs 377), RBL Bank (Target Price: Rs 455), DCB Bank (Target Price: Rs 233), Punjab National Bank (Target Price: Rs 115), AU Small Finance Bank (Target Price: Rs 1,216) and Equitas Small Finance Bank (Target Price: Rs 99).