SBI, HDFC or ICICI: Which bank stocks to bet on? Elara Capital shares top picks
Indian banks are passing through one of the best phases of their health. NIMs are rising, asset quality is improving and there is a policy push to bolster consumption and credit growth through lowering of interest rates. Bank Nifty is one of the better performing indices in a wobbly market. In such a climate Elara Capital sets out its top bank stock picks.
Kolkata: Overall the banking sector is passing through robust financial health. Asset quality of the sector is improving as is NIM (net interest margins). banks are expected to see credit growth with the RBI bringing down the cost of funds to push consumption, growth and thereby employment. In such an overall climate Elara Capital has set out its stock picks in the banking sector.
The gains for the banking industry, despite a wobbly equity market, were reflected in the Bank Nifty movement. On Dec 1, 2025, it crossed the 60,000 mark for the first time. IN 2025, Bank Nifty witnessed multiple record levels. Elara Capital is of the opinion that the risk-reward seems skewed in favor of frontline private banks with strong earnings and fair valuations.
Elara Capital has recently released a report on the outlook on select banking stocks in the new year. It has also explained which bank's stocks have the highest . The agency has said that better loan growth is expected in Q3FY25 apart from better NIMs, lower slippages in unsecured loans and stable recovery trends. In Q3 it prefers ICICI Bank, Kotak Mahindra Bank (among the private sector banks) and SBI (in the PSU stable) among the large banks. Among the mid-sized banks, its choices are Karur Vysya Bank and AU Small Finance Bank.
Target prices for some bank stocks
HDFC Bank
Accumulate
Target price: Rs 1,147
Market price: Rs 997
ICICI Bank
Buy
Target price: Rs 1,707
Market price: Rs 1,360
SBI
Accumulate
Target price: Rs 1,050
Market price: Rs 969
Kotak Mahindra Bank
Accumulate
Target price: Rs 2,481
Market price: Rs 2,164
Axis Bank
Accumulate
Target price: Rs 1,365
Market price: Rs 1,226
Bank of Baroda
Buy
Target price: Rs 326
Market price: Rs 291
Punjab National Bank
Accumulate
Target price: Rs 122
Market price: Rs 121
Canara Bank
Reduce
Target price: Rs 130
Market price: Rs 150
Watch out for
However, Elara Capital has also mentioned a few things to be cautious about. These are deposit trends (especially weak flows at the industry level) and incremental CD ratios are running high. It has also mentioned that the impact of the recent changes in labor laws on operating expenses have to be seen. In spite of a better Q3 outlook, Elara Capital expects some pressure on deposits and anticipate NIM revisions for FY27, which could have an effect on earnings revisions. Also if there are further Repo Rate cuts by the RBI, it will also have an impact. PSU banks are expected to have a stable quarter.
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