HDFC Bank, Axis Lead ₹1.5 Lakh Cr Wealth Erosion; Brokerages Stay Bullish

Shares of HDFC Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank have erased more than ₹1.5 lakh crore in combined market capitalisation this week after their June-quarter earnings, but analysts believe the sharp correction has created an attractive entry opportunity for long-term investors.

The four private lenders reported their Q1 FY27 earnings on Saturday, triggering a broad selloff in banking stocks. HDFC Bank and Axis Bank have declined as much as 9% this week, while Kotak Mahindra Bank and Yes Bank have slipped up to 3%. The weakness has dragged the Nifty Private Bank index down more than 4% over the past four trading sessions.

However, analysts said the decline should not be viewed solely through the lens of quarterly earnings. The broader market has also remained under pressure, with the Nifty 50 falling nearly 2% during the same period as escalating US-Iran tensions and higher crude oil prices revived inflation concerns and dampened investor sentiment.

Brokerages See Value Emerging

Despite the steep correction, brokerages continue to remain constructive on the sector, arguing that valuations have become increasingly attractive.

Equirus Securities named Axis Bank as its top pick among private lenders following the June-quarter earnings, followed by HDFC Bank, ICICI Bank and Kotak Mahindra Bank.

The brokerage said ICICI Bank continues to deliver industry-leading execution through resilient margins, strong profitability and healthy loan growth. However, it noted that much of this strength is already reflected in the bank's premium valuation, with the stock currently trading at around 17 times earnings.

For Axis Bank, Equirus said the lender appears to be nearing an earnings inflection point, with management indicating that net interest margins (NIMs) have likely bottomed out. The brokerage also highlighted improving retail disbursements, easing deposit-cost pressures and strong provisioning buffers that could help manage the transition to the expected credit loss (ECL) framework.

On HDFC Bank, Equirus described the lender as a high-quality franchise but said the investment case has become more medium-term in nature, with any recovery in margins expected to be gradual as the balance sheet normalises and pressure from FCNR(B)-related margins persists.

Macquarie maintained its 'Outperform' rating on ICICI Bank, HDFC Bank and Axis Bank after the first-quarter earnings, saying ICICI Bank's 16% year-on-year profit growth exceeded expectations, while valuations of HDFC Bank and Axis Bank remain reasonable. The brokerage, however, retained a 'Neutral' stance on Kotak Mahindra Bank.

Meanwhile, Jefferies and Motilal Oswal reiterated their 'Buy' ratings on HDFC Bank, with target prices of ₹1,050, implying an upside of around 39% from current levels.

Q1 Earnings Snapshot

Among the private lenders, HDFC Bank reported a 5% year-on-year increase in net profit to ₹19,060 crore for the June quarter, while net interest income (NII) rose 7% to ₹33,534 crore.

Axis Bank posted 23% growth in net profit and an 8% increase in NII, while Kotak Mahindra Bank reported 26% and 9% growth in net profit and NII, respectively.

Yes Bank recorded a 34% year-on-year rise in net profit, while NII grew 18%.

Among peers, ICICI Bank reported a 16% increase in standalone net profit to ₹14,805 crore, with NII rising nearly 13% during the June quarter.