HDFC Bank, ICICI Bank remain top bets as valuations stay attractive, says Kotak

Kotak Institutional Equities has retained an overweight stance on frontline private banks, preferring HDFC Bank and ICICI Bank for their attractive valuations and earnings-led re-rating potential, while keeping SBI as its top pick among public sector lenders. The brokerage expects valuation re-rating to be driven by higher loan yields, lower funding costs, and steady earnings growth rather than rapid credit expansion. Asset quality is forecast to remain strong through FY27 with lower slippages, though the outlook for loan demand stays cautious as strong foreign capital inflows are expected to ease deposit dependence without meaningfully accelerating credit growth.