US-Iran war: Why BFSI stocks rallied post Q4 results; ICICI Securities decodes

Domestic banking, financial and insurance stocks bore the brunt of the sell-off at the peak of the US–Iran war, as investors turned risk-averse amid heightened uncertainty. With the stock market erasing Rs 51 lakh crore, or 15 per cent of GDP, during the phase, financials accounted for the largest share of the decline at 36 per cent, driven by concerns over their FY27 earnings outlook, which have since proved unfounded. ICICI Securities in a latest note said stock reactions to Q4 results following the announcements have been largely positive to neutral, with sharp upward movements in the financial sector stocks such as HDB Financial Services (up 12 per cent), Angel One (up 8 per cent), ICICI Lombard (up 6 per cent) and HDFC AMC (up 5 per cent).

"Financial stocks from our coverage universe, post-Q4FY26 results, have indicated no concern regarding the Gulf crisis for the FY27 outlook, with most companies reporting better-than-expected or in-line results," ICICI Securities said.

It said lenders such as HDFC Bank Ltd, HDB Financial Services Ltd, YES Bank Ltd and PNB Housing guided for improved net interest income (NII) YoY growth of 16-24 per cent in FY27. Capital market players such as HDFC AMC and Angel One projected robust double-digit growth for FY27. Life and general insurance companies such as ICICI Prudential Life and ICICI Lombard are expected to grow in the mid-teens in terms of APE and GDPI, respectively. 

"Q4FY26 results so far from financial companies (banks, NBFCs, capital markets, insurance, etc.) and their management outlooks (so far) do not indicate any major threat to FY27 earnings due to the Gulf crisis; this is reflected in I-Sec’s earnings estimate revisions. Marginal FY27 downgrades in I-Sec estimates for a few companies were not attributed to the Gulf war, but were driven by other factors," it said.

Meanwhile ICICI Securities said a few consumer companies with Q4FY26 results have delivered strong double-digit volume growth and have beaten expectations. "Nestle India and Bajaj Consumer Care, both from our coverage universe, have delivered double-digit volume growth with a robust FY27 outlook," it said.

In the case of IT companies, ICICI Securities said TCS reported slow growth but largely in-line results. Wipro’s revenue growth of 0.2 per cent QoQ CC was a miss, and HCL Tech’s revenue contracted 3.3 per cen QoQ CC, it said. "In contrast, Persistent’s revenue grew 3.4 per cent QoQ CC and 16.1 per cent YoY CC," ICICI Securities said.