Bank stocks 2026: Motilal Oswal TPs for SBI, ICICI, HDFC

Why banks are back in focus

Motilal Oswal has reiterated a constructive view on Indian banking, arguing that the sector is set up for better performance as macro conditions improve and earnings recovery plays out. The brokerage continues to highlight large lenders with strong balance sheets and clearer growth visibility. In its banking commentary, it again points to ICICI Bank, HDFC Bank, State Bank of India (SBI), and AU Small Finance Bank (AU SFB) as preferred names. The focus, as laid out in the note, is on banks where valuations look favourable relative to fundamentals. The brokerage also links the outlook to an improving macro backdrop.

Motilal Oswal’s stated top picks in banking

Across the coverage, Motilal Oswal’s preferred banking picks repeatedly include ICICI Bank, HDFC Bank, SBI, and AU SFB. The rationale given is consistent: strong balance sheets, improving growth visibility, and valuations that are seen as supportive. It also expects banking stocks such as ICICI Bank, HDFC Bank, SBI, and AU Small Finance Bank to improve going ahead, aided by an impending earnings recovery and an improving macro environment.

ICICI Bank: target price and operating assumptions

Motilal Oswal has a target price of ₹1,750 for ICICI Bank. The brokerage describes ICICI Bank as well-positioned due to a strong retail and corporate franchise, best-in-class asset quality, stable margins, and consistent execution.

In its estimates, it expects ICICI Bank to sustain about 2.25% return on assets (RoA) over FY27-28E. The expected RoA is supported by steady loan growth, stable margins, and low credit costs of about 0.4% to 0.5%. Motilal Oswal also flags that strong operating performance and improving growth traction could drive a gradual re-rating, which underpins its “buy” stance in the note.

SBI: target price, growth expectations, and digital angle

For SBI, Motilal Oswal has cited a target price of ₹1,300 in the same “sector of the week” context. The brokerage expects SBI to sustain market share gains, supported by leadership in deposits and lending, a strong retail franchise, improving corporate credit demand, and deep digital penetration through YONO.

On the operating side, Motilal Oswal estimates SBI’s loan book could deliver a 13.6% CAGR over FY26-28. It also estimates an earnings CAGR of 8% over the same period. These assumptions are accompanied by stable asset quality and controlled credit costs, leading the brokerage to cite RoA/RoE of about 1.0%/15.5%.

Model portfolio action: SBI weight raised, HDFC trimmed

Motilal Oswal has also reshuffled its model portfolio by raising its weight in SBI by 100 basis points. The move was funded by trimming exposure to HDFC Bank. In the brokerage’s framing, SBI continues to be its top banking idea and is part of its top five India picks. The reasons cited include strong loan growth prospects, a robust liability franchise, a benign CD ratio, and strong balance sheet liquidity.

Macro triggers mentioned: tax, GST, and RBI rate cuts

In a separate Hindi-language segment referenced in the provided text, Motilal Oswal points to a more supportive environment driven by GST rate cuts, income tax relief, and a 50 basis point cut in the RBI policy rate. Against this backdrop, it expects a meaningful improvement in loan demand in the second half of FY26.

The same section also provides price and target snapshots: ICICI Bank was stated to have closed at ₹1,365, with a Motilal Oswal target of ₹1,670, while HDFC Bank was stated to have closed at ₹964.75 with a target of ₹1,150.

Key figures at a glance

List referenced: “12 best bank stocks to buy in India 2026”

The provided material also includes a table listing 12 banking stocks with CMP as of 4 March 2026, along with market cap, price-to-book (P/B), and ratings.

Data is stated as “Data as on March 2026”. The same material also claims ICICI Bank has the highest return on equity (ROE) of 19.47% and the second-highest return on assets (ROA) of 2.08% among the top 10 bank stocks in the country.

Broader context: additions beyond banks

Alongside banking, the provided text notes Motilal Oswal included ICICI Prudential AMC among additions, citing sustained market share gains, scaling up of the non-mutual fund business to over 15% of revenue, and best-in-class profitability. Separately, it states Motilal Oswal remains overweight on defence and EMS names and added Hindustan Aeronautics to the portfolio, citing valuations of 28x and 22x P/E for FY27 and FY28, respectively.

What the combined signals mean for investors

The common thread in the brokerage commentary is a preference for banks it believes can sustain profitability with controlled credit costs while growth visibility improves. The explicit targets and model portfolio changes also show SBI’s prominence in Motilal Oswal’s positioning, even as it trims HDFC Bank to fund higher SBI exposure. For ICICI Bank, the note leans heavily on RoA expectations and low credit costs, suggesting confidence in execution and asset quality. For SBI, it highlights loan growth, earnings growth, and the YONO-driven digital angle.

Conclusion

Motilal Oswal’s latest sector view keeps banks in focus, with SBI and ICICI Bank highlighted through target prices and operating estimates, while HDFC Bank and AU SFB remain part of its preferred list. The brokerage’s portfolio move to raise SBI weight by 100 bps and its references to an improving macro set the near-term context. Future attention is likely to stay on whether the expected pickup in loan demand in H2 FY26 and the projected profitability metrics play out as outlined in the notes.