Motilal Oswal expects banks under its coverage to deliver around 15% earnings CAGR over FY26-FY28, supported by healthy credit growth, resilient asset quality and improving operating metrics. The brokerage anticipates net interest income (NII) to rise 10.9% YoY in the June quarter, while aggregate profit after tax (PAT) is seen growing 9.6% YoY. Private banks are projected to report PAT growth of 10.1% YoY, while PSU banks are expected to post a 9% increase. Jefferies has upgraded Maruti Suzuki to Buy from Hold with a target price of ₹16,500, up from ₹13,800, citing easing macro concerns and strong India PV demand in H1CY26. The brokerage expects 16% EPS CAGR over FY26-28 and views the current PE at 24x FY27 as reasonable.
The banking sector may post healthy earnings growth in Q1FY27, supported by robust credit growth and stable asset quality, though margin trends are expected to remain mixed. Systemic credit growth, which stood at 17.7% YoY as of mid-June 2026, is expected to continue supporting business momentum across lenders. However, deposit mobilisation remains a key challenge, with industry-wide deposit growth of around 12% lagging loan growth and keeping competition for deposits intense. Despite margin pressures, asset quality trends remain encouraging with stress in unsecured retail loans and microfinance portfolios continuing to ease, while most banks have indicated a stable credit environment. Motilal Oswal expects credit costs for large private banks to remain contained, with PSU banks likely to continue benefiting from benign asset-quality trends.
Motilal Oswal's preferred picks in the banking sector remain State Bank of India (SBI), ICICI Bank, HDFC Bank and AU Small Finance Bank. The brokerage notes that recent management changes at HDFC Bank are unrelated to underlying business fundamentals. Kotak maintains a constructive view on the banking sector, preferring frontline banks including HDFC Bank and ICICI Bank among private lenders and SBI among public sector banks. The firm emphasizes attractive valuations and favorable risk-reward outlook supporting the constructive banking sector view, with the firm preferring frontline banks over larger private banks and PSUs.
Indian markets have been lackluster over the past six months with Nifty declining 8.7% CY26YTD, underperforming several global peers due to record FII outflows and earnings concerns. However, India's GDP growth accelerated to 7.7% YoY in FY26, exceeding expectations of 7.5% YoY and improving from 7.1% in FY25, with the services segment being the primary growth engine. Motilal Oswal's key overweight sectors include autos, PSU banks, diversified financials, manufacturing and industrials, consumer discretionary, and new-age platforms, while the brokerage remains underweight on oil and gas, private banks, metals, consumer staples, IT, and commodities. The brokerage's model portfolio reflects preference for growth visibility, structural domestic growth plays, and select global value names.
