Analysts remain bullish on HDFC Bank and ICICI Bank following their Q4FY26 results, with HDFC Bank's future tied to loan growth acceleration and ICICI Bank poised for a valuation rerating due to strong performance.
Analysts retained a bullish stance on HDFC Bank and ICICI Bank following their fourth-quarter (January-March/Q4) results for 2025-26 (FY26), though their outlooks diverge on key growth drivers.
While HDFC Bank's near-term trajectory hinges on accelerating loan growth, ICICI Bank is seen as a candidate for valuation rerating over the medium term.
"HDFC Bank delivered a broadly in-line Q4FY26 performance on the profitability front, with strong traction in deposit growth.
"However, a meaningful acceleration in loan growth is still awaited and remains a key trigger for potential rerating," Antique Stock Broking said.
The brokerage maintained a "buy" rating but trimmed its target price to Rs 1,055 from Rs 1,100. On the bourses, HDFC Bank shares slipped 0.54 per cent to Rs 795.5.
HDFC Bank reported a 9 per cent year-on-year (Y-o-Y) rise in net profit to Rs 19,220 crore for Q4FY26.
Net interest income (NII) grew 3.2 per cent Y-o-Y to Rs 33,080 crore, while NIM expanded by 3 basis points (bps) quarter-on-quarter (Q-o-Q) to 3.38 per cent.
Loan growth remained moderate, with advances rising 12.1 per cent Y-o-Y and 4.1 per cent Q-o-Q to Rs 29.4 trillion, led by small and medium enterprises (up 17.2 per cent Y-o-Y) and corporate segments (up 13 per cent Y-o-Y).
Deposits grew 14.4 per cent Y-o-Y to Rs 31.1 trillion, with the current account savings account (Casa) ratio improving to 34.1 per cent.
The loan-to-deposit ratio (LDR) improved to 94.6 per cent from 98.7 per cent in the third quarter (October-December/ Q3) of FY26.
For ICICI Bank, JM Financial highlighted sector-leading loan growth, strong net interest margin (NIM) management, and steady asset quality trends, which could support its premium valuation among large banks.
The brokerage retained its "buy" rating and raised the target price to Rs 1,630 from Rs 1,550. ICICI Bank rose 0.5 per cent to Rs 1,354.85.
The Sensex settled 0.03 per cent higher.
In contrast, ICICI Bank reported a stronger-than-expected performance.
Net profit rose 8 per cent Y-o-Y and 21 per cent Q-o-Q to Rs 13,700 crore.
NII increased 8.4 per cent Y-o-Y to Rs 22,980 crore, while NIM stood at 4.32 per cent, up 2 bps sequentially.
The bank also posted robust loan growth of 15.8 per cent Y-o-Y (6 per cent Q-o-Q), driven by business banking (up 24.4 per cent Y-o-Y), retail loans (11 per cent), and corporate lending (up 9.3 per cent).
Deposits grew 11.4 per cent Y-o-Y, and the Casa ratio improved to 41.4 per cent.
Both lenders reported improved asset quality and provisioning trends.
According to Emkay Global, ICICI Bank's credit growth recovered after a deliberate slowdown in the first half of FY26, supported by traction in corporate, rural, and business banking segments.
"This, coupled with stable margins and negligible provisions, led to a profit beat and best-in-class return on assets (RoA) of 2.4 per cent," the brokerage said, maintaining a "buy" rating with a target price of Rs 1,785.
It added that despite global uncertainties, the bank has sufficient levers to sustain growth.
HDFC Bank, on the other hand, has refrained from reiterating its earlier 2026-27 (FY27) loan growth guidance of outpacing system growth.
The bank indicated it will adopt a calibrated approach to lending, focusing on risk/reward dynamics while continuing to strengthen its deposit franchise.
"While system credit growth is improving, HDFC Bank may see calibrated loan growth given its efforts to improve LDR.
"Consequently, earnings growth will rely more on operating leverage and mix improvement than on balance-sheet expansion," said Equirus Securities.
The brokerage retained a "long" rating with a target price of Rs 1,160.
Emkay expects HDFC Bank's RoA to gradually improve to 1.9–2 per cent over FY27 to 2028-29, while ICICI Bank is likely to sustain a higher RoA of 2.1–2.2 per cent over the same period.
Motilal Oswal projected FY27 RoA/return on equity at 1.84 per cent/14.4 per cent for HDFC Bank and 2.2 per cent/15.9 per cent for ICICI Bank.