Kotak Recommends HDFC Bank, ICICI Bank as Top Picks on Attractive Valuations

Kotak has flagged HDFC Bank (HDFC) and ICICI Bank (ICICIBANK) as top picks within India’s banking sector, citing compelling valuations after a sharp correction. On June 24, 2026, Nifty Bank surged nearly 2%, with ICICI Bank gaining 2.7% to ₹1,374 and HDFC Bank rising 2% to ₹790 on the NSE. Both stocks dominate Nifty Bank’s weight. With Q1 FY27 results approaching, attention is firmly on private-sector lenders.

Why Kotak Is Bullish on HDFC Bank

HDFC Bank has pulled back sharply from its highs. The stock hit a 52-week high of ₹1,020.50 on October 23, 2025, and a 52-week low of ₹726.65 on April 2, 2026 a correction of nearly 29%. That dip has made valuations attractive for long-term positioning.

Key HDFC Bank data points:

• Current price: ~₹789–₹790 (as of June 24, 2026)
• Trailing P/E: 16x based on TTM earnings ending March 2026
• Gross NPA: 1.42% among the lowest for large Indian banks
• Market cap: ~₹11.9 lakh crore
• Q4 FY26 standalone net profit: ₹19,221.05 crore, up 9.11% year-on-year

PL Capital has a ‘Buy’ on HDFC Bank with a target price of ₹1,100, while Systematix assigns a ‘Buy’ with a target of ₹960. Multiple brokerages see 15–20% upside from current levels.

ICICI Bank: The Growth Angle

ICICI Bank brings a different story higher growth, stronger margins, and better profitability ratios. The stock has held up comparatively well through 2026’s volatility.

Key ICICI Bank metrics:

• Current price: ~₹1,338–₹1,374 (as of June 24–25, 2026)
• ROE: 19.47% highest among India’s top 10 banks
• NIM: 3.79%; Net NPA: 0.45% 
• Market cap: ~₹9.95 lakh crore
• Trailing P/E: 17–18x

Motilal Oswal reiterated a ‘Buy’ on ICICI Bank with a target price of ₹1,750, citing healthy loan growth, stable margins, and strong profitability. PL Capital also has a ‘Buy’ with a target of ₹1,825. 

Bank Nifty and Sector Context

The broader banking recovery is building momentum. The Nifty Bank index hit an intraday high of 58,128.65 on June 24, 2026, with all 14 constituents trading in the green.

Key sector triggers driving the rally:

• RBI kept the repo rate unchanged at 5.25% with a neutral stance at its latest MPC meeting.
• FPIs invested ~₹35,000 crore in Indian bonds in June 2026, boosting sentiment.
• Crude oil price decline eased macro pressure on the banking sector.
• System loan growth ran at 15–16% year-on-year through March 2026.

Other private-sector stocks in focus include Kotak Mahindra Bank (₹406), Axis Bank (₹1,385), and AU Small Finance Bank (₹1,064), all gaining on June 24.

Valuation Gap Makes the Case Clearer

The valuation divergence between HDFC Bank and ICICI Bank is a key talking point. HDFC Bank trades at 2.1x price-to-book, while ICICI Bank trades at 2.9x to 3.2x a premium justified by ICICI’s stronger return on equity. 

For HDFC Bank specifically, the price-to-book of 2.1x is well below its historical average. At 1.4x adjusted price-to-book, HDFC Bank looks undervalued relative to history, making it attractive for those seeking recovery potential. 

Both stocks enter Q1 FY27 earnings season with HDFC Bank reporting on July 18, 2026 as the most-watched names in Indian banking. Kotak’s top pick thesis rests on one clear idea: two franchise-quality banks trading below their long-term valuation norms, with sector tailwinds turning positive.

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.