Goldman Sachs Picks ICICI, Kotak Mahindra: Top Indian Bank Stocks

Goldman Sachs has initiated coverage on fourteen Indian banks, identifying ICICI Bank and Kotak Mahindra Bank as its top selections with ‘Buy’ ratings. The firm projects a cyclical recovery in the banking sector’s earnings, anticipating significant upside potential across its covered institutions.

Top Picks and Ratings

Goldman Sachs issued ‘Buy’ ratings for ICICI Bank, setting a target price of ₹1,935, which implies a 37% upside. Kotak Mahindra Bank also received a ‘Buy’ rating with a target price of ₹509, indicating a 31% upside. These selections underpin the brokerage’s optimistic outlook for the Indian banking space.

• ICICI Bank: ‘Buy’ rating, target price ₹1,935, 37% upside
• Kotak Mahindra Bank: ‘Buy’ rating, target price ₹509, 31% upside
• Other ‘Buy’ ratings: HDFC Bank, Axis Bank, Federal Bank, AU Small Finance Bank (projected 18% to 19% upside)
• ‘Neutral’ ratings: IndusInd Bank, IDFC First Bank, Bandhan Bank, State Bank of India
• ‘Sell’ ratings: RBL Bank (potential 26% downside), Yes Bank (2.1% downside), Bank of Baroda, Punjab National Bank

Sectoral Performance and Growth Drivers

The firm projects private banks will outperform state-owned banks over the next two years, driven by superior loan growth, net interest margins (NIMs), and asset quality. This outperformance is expected as private players benefit from stronger FCNR(B) deposit mobilization and a resurgence in unsecured lending.

Goldman Sachs estimates system loan growth to remain around 14-15% between FY26 and FY29E. Deposit growth is also anticipated to accelerate, supported by improved liquidity conditions.

• System loan growth: Estimated 14-15% between FY26 and FY29E
• NIMs: Expected to bottom out in the next two quarters before gradual recovery
• Asset Quality: Anticipated to remain stable, with stress limited to granular unsecured loans