Smaller private banks have outperformed larger peers and PSU banks since Dec'24
Banks with weaker liability franchises, lower floating rate loan mix, and inexpensive starting valuations have led the outperformance
Expect near-term consolidation in smaller private banks, with growth/profitability differential vs larger peers to widen from 3QFY26
1Q/2QFY26 likely to be weak with subdued RoA due to soft credit growth, margin pressure, and elevated credit costs
TOP PICKS:
Axis Bank - Target price ₹1,403
HDFC Bank - Target price ₹2,269
ICICI Bank - Target price ₹1,640
Kotak Mahindra Bank - Target price ₹2,540
SBI - Target price ₹955
Ujjivan Small Finance Bank - Target price ₹70
Equitas Small Finance Bank - Target price ₹93
Federal Bank - Target price ₹239
City Union Bank - Target price ₹245
Karur Vysya Bank - Target price ₹310