India Large Private Banks Underperformed, undervalued – upside unlocked

Research evidence excerpt

India Large Private Banks Underperformed, undervalued – upside unlocked

13 May 2026

India Large Private Banks EquitiesCommercial Banks

Underperformed, undervalued – upside unlocked India

◆ EPS cut cycle for large PVBs looks largely behind us; FY27e Abhishek Murarka*

should see lesser jaws between loan / core-PPOP growth SeniorHSBC SecuritiesAnalyst, Indiaand CapitalFinancialsMarkets (India) Private

Limited

◆ We see positive impact from lesser competition from PSBs, safer abhishek.murarka@hsbc.co.in

+91 73049 07567

havens in case of asset quality issues, revival in retail lending

Rahil Shah*

Analyst, India Financials

◆ Prefer ICICIBC (stronger liabilities, consistent earnings) and HSBC Securities and Capital Markets (India) Private

AXSB (alpha generation opportunity), both Buy rated Limitedrahil.shah@hsbc.co.in

+91 22 6628 3719

Four reasons why we like large private banks: First, the EPS cut phase should be Yash Taparia*

largely behind us. Large PVBs have seen 1-23% in EPS cuts over 24 months led by HSBC Securities and Capital Markets (India) Private

several factors. These may not recur and are in our base estimates. Second, they should Limited

yash.taparia@hsbc.co.in

be safer havens once the impact of the Middle East conflict begins to crystalize into +91 080 6737 2394

slippages / forward flows. Third, the excess liquidity with PSU Banks has been largely

deployed, which may bring about some pricing discipline from them in FY27. Fourth, any * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

pick-up in unsecured retail loans would support NIM and improve fees, however small. not registered/ qualified pursuant to FINRA regulations

Given large PVB’s underperformance, we see a 12-month return potential of 20-34%.