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Global financial services firm Goldman Sachs has adopted a largely positive outlook on the Indian banking sector, initiating coverage across 14 major public and private sector banks. Out of the evaluated stocks, the brokerage has issued a ‘Buy’ recommendation on 6 banks, maintained a ‘Neutral’ stance on 4 banks, and recommended a ‘Sell’ on 4 banks.

According to the report, private sector lenders are currently navigating a crucial juncture where sustained improvements in profitability will serve as the primary catalyst for stock performance.

Banks with ‘Buy’ Recommendations and Target Prices

Goldman Sachs has expressed strong confidence in top-tier private and select regional banks, setting lucrative target prices:

HDFC Bank: Rated ‘Buy’ with a target price of ₹861. The brokerage expects the bank’s pre-provisioning operating profit to recover through FY27, followed by high double-digit growth between FY27 and FY29.

ICICI Bank: Rated ‘Buy’ with a target price of ₹1,935, highlighted as a consistent, long-term compounding growth story backed by a solid business franchise.

Axis Bank: Rated ‘Buy’ with a target price of ₹1,477, supported by expected improvements in operating profit and favorable valuation levels.

Kotak Mahindra Bank: Rated ‘Buy’ with a target price of ₹509, described as an under-appreciated banking franchise with high potential for operational recovery.

Federal Bank & AU Small Finance Bank: Rated ‘Buy’ with targets of ₹425 and ₹1,270 respectively, driven by autonomous growth drivers and consistent profitability.

Banks with ‘Neutral’ Ratings

The brokerage maintains a balanced risk-reward perspective for several major lenders, assigning a ‘Neutral’ stance:

State Bank of India (SBI): Target price set at ₹1,170.

IndusInd Bank: Target price set at ₹1,020, noting ongoing efforts to revitalize core operations against fair current valuations.

IDFC First Bank: Target price set at ₹92, with earnings recovery largely factored into current market prices.

bank: Target price set at ₹180.

Banks with ‘Sell’ Recommendations

Goldman Sachs has adopted a cautious stance on select public and private lenders, advising investors to reduce exposure or consider selling:

Yes Bank: Rated ‘Sell’ with a target price of ₹22. While return on assets is projected to improve incrementally, the brokerage notes it may not fully justify prevailing valuations.

Punjab National Bank (PNB): Rated ‘Sell’ with a target price of ₹103, citing diminishing cyclical tailwinds and lingering profitability concerns.

Bank of Baroda: Rated ‘Sell’ with a target price of ₹245, driven by concerns over a high loan-to-deposit ratio and capital-raising dynamics.

RBL Bank: Rated ‘Sell’ with a target price of ₹285, reflecting expectations of a protracted recovery timeline.