Global brokerage firm Jefferies has identified three leading Indian banks — Kotak Mahindra Bank, IndusInd Bank, and Bandhan Bank — as top investment picks with strong growth potential ahead of their Q2 FY26 earnings. According to Jefferies, each of these stocks could deliver up to 30% gains, backed by healthy loan growth, improving asset quality, and strategic balance sheet management.
Kotak Mahindra Bank Leads with Strong Growth
Kotak Mahindra Bank emerged as the top performer among the three. The bank reported an impressive 16% year-on-year (YoY) growth in net loans and a stable 15% rise in total deposits. CASA (Current Account Savings Account) deposits also climbed 11% YoY, reflecting strong customer confidence. Jefferies noted that Kotak’s sustained balance sheet expansion, coupled with consistent credit quality, positions it well for the coming quarters. The brokerage has maintained a ‘Buy’ rating on the stock, setting a target price of ₹2,550 — implying a potential upside of 21% from current levels.
IndusInd Bank Expected to Rebound Post Consolidation
IndusInd Bank, on the other hand, showed signs of consolidation in Q2, with loan growth down by 8% YoY and deposits dipping 5%. CASA deposits saw a notable 19% YoY decline, mainly due to slower corporate and Microfinance Institution (MFI) lending. However, Jefferies said the bank’s move to cut deposit rates could support margins in the upcoming quarters. The firm expects a recovery in loan growth and fee income, maintaining its ‘Buy’ recommendation with a target price of ₹920, representing a 23% upside.
Bandhan Bank Poised for Recovery with MFI Focus
Bandhan Bank’s performance was softer compared to its peers, recording a 7% YoY loan growth in Q2 FY26. Its CASA deposits dropped 6% YoY as customers shifted towards term deposits following interest rate adjustments. Despite this, the bank’s MFI collections remained steady at 97.8%, up slightly from 97.6% in the previous quarter. Jefferies highlighted that improvements in MFI trends and better collection efficiency will be key to driving profitability and return on assets (ROA). It reiterated its ‘Buy’ rating on Bandhan Bank, with a price target of ₹215, suggesting a 30% potential upside.
Jefferies concluded that the Indian banking sector remains well-positioned for growth, with Kotak Mahindra, IndusInd, and Bandhan Bank expected to deliver strong returns as economic conditions improve and credit demand rises in the second half of FY26.
