Bank Stocks In Focus: HDFC Bank, Axis Bank Shares Crash 5% After Q1 Results; Bank Nifty Slips 1.5%, ICICI Bank, PNB Gain

Bank stocks were in sharp focus on Monday, July 20, after several lenders announced their June quarter (Q1 FY27) results over the weekend and after market hours on Friday. The NIFTY Bank index fell over 1.5% in early trade.

HDFC Bank and Axis Bank were the top losers, both down nearly 5%. HDFC Bank shares fell to ₹778.75 on the NSE, while Axis Bank dropped to ₹1,261.90. Kotak Mahindra Bank and Yes Bank also slipped over 3% each, pulling the Nifty Private Bank index down close to 2.7%.

On the other hand, ICICI Bank was the one bright spot, rising as much as 2.47%. PNB also did well, jumping over 5% on strong profit numbers.

Banking stocks Q1 results

HDFC Bank's profit grew a modest 5% year-on-year to ₹19,060 crore, but margins stayed under pressure as the bank continues to lend faster than it raises deposits. Axis Bank's profit jumped 23% to ₹7,632 crore, helped mainly by a sharp fall in provisions rather than core business growth, while its margins slipped 15 bps during the quarter. ICICI Bank had the cleanest quarter among large private banks, with profit up around 15%, strong loan growth of nearly 20%, and margins holding steady at 4.4%. Punjab National Bank's profit more than tripled to ₹5,253 crore from a year ago, aided by lower provisions and improving asset quality. Yes Bank's profit grew 33%, though the bank also had to set aside more money for bad loans during the quarter.

Banking stocks to buy

Based on the first set of Q1 results, ICICI Bank remains the top pick of Kotak Securities among large private banks, followed by Axis Bank and HDFC Bank.

ICICI Bank | Buy | Fair Value: ₹1,800

ICICI Bank continues to deliver industry-leading operating metrics, reinforcing the valuation premium it commands over peers, according to Kotak Neo Research. A solid ~20% loan growth, flat NIM at 4.4%, a healthy CASA ratio and lower credit costs helped the bank post a strong RoE of 17% for the quarter.

"We do not see downgrades to our estimates currently. We value the bank at ~2.5X book and ~20X June FY2028E EPS for RoEs at ~15% levels," the report noted, adding that it maintains ICICI Bank as its top idea given its best-in-class operating performance.

It retained a 'Buy' rating on ICICI Bank, keeping its fair value unchanged at ₹1,800.

Axis Bank | Buy | Fair Value: ₹1,600

Axis Bank delivered a healthy 23% year-on-year earnings growth in the June quarter, though operating profit stayed flat, Kotak Securities noted. Loan growth was solid at nearly 20%, led by SME and corporate lending, but a 15 bps sequential fall in net interest margin turned out to be the key disappointment for the quarter.

"Although management expects NIMs to bottom out and recover, our base case assumes only a modest uplift from the current levels," the note said, adding that asset quality trends continue to look comfortable.

Kotak Neo Research kept its 'Buy' rating on Axis Bank unchanged, along with its fair value of ₹1,600.

HDFC Bank | Buy | Fair Value: ₹1,050

HDFC Bank reported around 5% year-on-year earnings growth, with weak operating profit growth in the base quarter offset by lower provisions, the report said. Loan growth stood at roughly 15%, while margins slipped 10 bps sequentially to 3.3%.

"The pursuit of loan growth in an increasingly constrained deposit environment continues to delay NIM expansion, undermining a key pillar of our positive investment thesis," it noted, pointing to a rise in the credit-deposit ratio to 95.8% during the quarter.

Kotak Neo Research has maintained its 'Buy' rating on HDFC Bank, with the fair value unchanged at ₹1,050.

Also Read - PNB Q1FY27 Results: Profit Climbs To ₹5,253 Crore As Bad Loan Ratio Falls Further, Share Rises