ICICI Delivers Growth, HDFC Bank Stands Cautious in Q1, but Both Stocks Rise 2%

Shares of India’s banking behemoths—HDFC Bank and ICICI Bank—rose nearly 2% each on July 21, fresh on the heels of their first-quarter earnings. But while the gains in the counters were equally distributed on the surface, the underlying results told two very different tales.

ICICI Bank came through with a robust set of numbers, posting a 15.5% year-on-year rise in net profit to ₹12,768 crore, comfortably ahead of Street estimates. In contrast, HDFC Bank saw its consolidated net profit dip marginally to ₹16,258 crore, down from ₹16,475 crore a year ago, even after factoring in a one-time gain of ₹9,128 crore from the IPO of its subsidiary, HDB Financial Services.

Usually, such a divergence in bottomlines would reflect in stock performance. This time, the market’s reaction was far more measured. Investors happened to reward ICICI for its operational strength while still holding on to a love affair with the HDFC tag and the lender’s long-term strategy, despite near-term profit pressure.

Win after Win

ICICI Bank continued to impress on core performance. Its net interest income (NII) rose 8.4% to ₹21,634 crore, supported by stable margins and a stable approach to high-yield lending. Gross advances grew 13.2% year-on-year to ₹13.64 lakh crore, with corporate credit doing much of the heavy lifting. Asset quality also held firm, with gross NPA at 1.67% and net NPA at 0.41%, both showing year-on-year improvement.

Analysts have taken note. Global brokerage Nomura lifted the bank’s target price to ₹1,740, citing strong earnings visibility and return on equity (RoE) of 16% over FY26–28. Following the lead, Nuvama Institutional Equities also raised its target to ₹1,670, pointing to a beat on core operating profit and stable asset quality. Even as loan growth eased, ICICI’s preference for profitability over pace has found favour across the Street.

Cautious Yet Calculated

For HDFC Bank, Q1 told a more complex story. Despite a modest 5.4% growth in NII to ₹31,438 crore, the bank’s net interest margin (NIM) slipped to 3.35%, down from 3.46% in the previous quarter, pressured by deposit repricing. Gross advances grew 6.7% to ₹26.53 lakh crore, lagging behind ICICI’s expansion.

The real headline, however, lay in the bank’s provisioning. HDFC made a sizeable ₹14,442 crore in total provisions, including ₹9,000 crore in floating buffers and ₹1,700 crore in contingent provisions, a sign of prudence in an uncertain macro climate. Brokerages like Emkay Global Financial Services and Nuvama Institutional Equities called this a strategic move, one that strengthens the bank’s balance sheet heading into the second half of the year.

And so, looking ahead, brokerages remain optimistic. Emkay has reiterated its 'buy' call and raised the target to ₹2,300, citing expected liquidity improvement and a pick-up in loan growth in H2. Nuvama also bumped up its target to ₹2,270, forecasting that the growth gap with peers could narrow meaningfully over FY27.

The Bigger Picture

Despite ICICI Bank clearly winning on profitability metrics this quarter, both lenders remain top picks for brokerages on the Street. ICICI’s consistent delivery on return metrics and disciplined growth strategy keeps it in elite territory, but HDFC Bank, still the larger franchise by size and reach, is playing a longer game. By choosing to shore up buffers now and absorb short-term pain, the bank appears to be laying the groundwork for a more aggressive second half, analysts expect.

That said, the uptick in shares of both ICICI and HDFC Bank worked the most for the Nifty Bank index, which rose close to 1%.