ICICI Bank tops analyst picks as Indian lenders report Q1

India’s major private lenders, including ICICI, HDFC, Axis, Kotak Mahindra and Yes Bank, are preparing to release June-quarter results this week. Analysts broadly expect modest core pre-provision operating profit growth, constrained by moderating net interest margins and seasonally elevated credit costs that will likely keep profit after tax growth muted.

Underlying credit demand shows diverging trends. Motilal Oswal Financial Services noted strong demand in the micro, small and medium enterprise sector driven by an extended working capital cycle. While private banks continue to dominate larger loans, public sector lenders are capturing incremental market share through competitive pricing and government-backed lending schemes.

This macro backdrop has created sharp divergence in equity performance year-to-date, with Yes Bank, ICICI and Axis gaining 5% to 11%, while HDFC and Kotak have fallen up to 17%. ICICI Bank has emerged as the standout pick. Vaqarjaved Khan of Angel One highlighted its return on equity consistently above 18% and the cleanest asset quality among large private peers. “Yes Bank remains a speculation, not an investment. ICICI Bank is none of those things. It is a compounding machine at a reasonable valuation, entering a quarter where loan growth, treasury income, and controlled credit costs are all expected to converge positively,” Khan said.

HDFC Bank is viewed primarily as a defensive holding. Harshal Dasani of INVasset PMS pointed to its unparalleled deposit franchise but warned that normalising credit-deposit ratios and margin absorption following its merger limit near-term upside. Nomura noted HDFC's reported loan growth remains strong despite the broader margin headwinds. Axis Bank is recognised for retail momentum and improving deposit granularity, though its recent valuation re-rating leaves little room for error. Kotak Mahindra Bank faces specific margin pressures and is navigating a post-CEO transition, making its risk-reward less attractive.

From a trading perspective, Sudeep Shah of SBI Securities noted that ICICI and HDFC possess the strongest technical setups, whereas Kotak remains the weakest. “The stance is not a single-name call but a positioning framework where ICICI Bank has the strongest combination of expected print quality, valuation cushion, and analyst conviction across the cohort,” Dasani concluded.