Private banks remain in focus as credit growth strengthens; selectivity key amid valuation concerns: Dnyanada Vaidya

Brokerage view on private sector banks remains constructive, supported by robust credit growth of 17%+ (per latest RBI data) and benign asset quality, with the sector expected to deliver ~15% CAGR over the next two years. Margin recovery is anticipated, particularly for larger private banks, aided by an expected rate cycle reversal, though deposit growth lagging at 12-12.2% versus 17%+ credit growth remains a key watchpoint. Top picks are ICICI Bank and Kotak Mahindra Bank among large private banks, SBI among PSU peers, Federal Bank in mid-cap, and Ujjivan SFB in small-cap; HDFC Bank faces near-term overhang from deposit mobilisation and leadership concerns.