- Shares of major private banks fell nearly 5% after Q1FY27 results amid weak global cues
- NSE Nifty 50 dropped 0.59%, BSE Sensex declined 0.74% on Monday due to market bearishness
- HDFC Bank showed lower net interest margins, Axis and Kotak shares also declined sharply
Shares of leading private banking majors such as ICICI, Axis, Kotak Mahindra, and HDFC Bank faced selling pressure and dropped nearly 5% in early trade on Monday, July 20, after announcing their April-June quarter results for fiscal 2026-27 (Q1FY27) last week. The bank counters dropped sharply after the opening bell amid a bearish sentiment in the market as frontline benchmarks slumped following weak global cues amid escalating conflict between US and Iran. The NSE Nifty 50 benchmark fell 0.59% or 143.75 points to 24,190.55. The BSE Sensex declined 0.74% or 581.97 points to 77,569.48.
HDFC Bank disappointed D-Street in terms of net interest margins during the first quarter of current fiscal, while ICICI Bank delivered a strong performance. Shares of HDFC Bank opened at Rs 790 against a previous close of Rs 819.60, extending losses by upto 5% to hit an intraday low of Rs 777.50 apiece on the NSE. Similarly, shares of Axis Bank fell in early session and is 5.03% lower at Rs 1,261.70 apiece on the NSE. Kotak Mahindra Bank shares last traded 3.06% lower at Rs 378.90 apiece on the NSE.
ALSO READ: ICICI Bank Q1 Review: Strong Loan Growth, Stable Margins Keep Analysts Upbeat
Q1 Performance By Private Banks: Buy, Sell, Or Hold?
HDFC Bank's June-quarter earnings fell short of analysts' expectations as lower net interest margins and a sharp decline in other income weighed on operating profit, even as net profit rose on lower provisions. Brokerages said the bank continued to deliver healthy loan and deposit growth, but softer loan yields, margin pressure and muted fee income limited earnings growth.
They expect loan growth to remain resilient, while margin recovery will depend on funding costs easing and deposit conditions improving. Global brokerage Citi maintained a 'Buy' rating on the stock and cut its target price to Rs. 970 from Rs. 1,020, highlighting that June-quarter earnings missed expectations because of a 13-basis-point sequential decline in net interest margin. It also noted that fee income remained weak, while operating expenses and credit costs were broadly contained.
ALSO READ: HDFC Bank Q1 Review: Brokerages Flag Margin Pressure Despite Steady Loan Growth
Domestic brokerage Kotak Securities maintained a 'Buy' call with a target price of Rs. 1,050 on the stock and said that the downside appears limited, although near-term triggers remain absent. Weak net interest margin performance resulted in muted earnings growth for HDFC Bank. The balance sheet transformation is visible, but the improvement has yet to translate into earnings.
Kotak Mahindra Bank posted a net profit of Rs 4,123 crore in the June quarter of current fiscal. The private-sector lender's net profit increased 26% year-on-year from Rs 3,282 crore, beating Bloomberg estimate of Rs 3,975 crore. Asset quality remained stable during the quarter. Gross non-performing assets improved to 1.18% of total advances from 1.20% in the preceding quarter.
Citi maintained a 'Buy' call on Axis Bank with a target price of Rs 1,620, highlightng a steeper NIM compression than expected. The NII growth during the quarter was soft, according to the brokerage. The bank's deposits are growing fasther than the industry benchmarks while the CASA remained resilient during the quarter-under-review.
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