Wall Street major Goldman Sachs expects banks' loan growth to remain robust at around 14-15% during FY26-FY29, representing a moderation from the current elevated run-rate of 18% YoY as of June 2026. It initiated coverage on 14 Indian banks, with ‘Buy’ calls on 6 private lenders. Here is the full list.

ICICI Bank

Goldman Sachs named ICICI Bank as one of its top banking picks. It initiated coverage on the stock with a ‘Buy’ call and a target price of Rs 1,935 apiece, implying 36% upside potential from the stock’s previous closing price of Rs 1,420 apiece on NSE. Despite consistently delivering strong NIMs and strong asset quality through the recent unsecured lending cycle, the stock has de-rated by 15% over the past two years, Goldman Sachs noted, adding that it views this as an attractive entry point. “With loan growth re-accelerating and continued cost to-income improvement driven by operating leverage, we see the bank well positioned for a strong earnings’ recovery over the medium term,” it further said.

Kotak Mahindra Bank

Goldman Sachs named Kotak Mahindra Bank as one of its top banking picks. It initiated coverage on the stock with a ‘Buy’ call and a target price of Rs 509 apiece, implying 26% upside potential from the stock’s previous closing price of Rs 402.80 apiece on NSE. Goldman Sachs noted that asset-quality challenges are largely behind, with continued share gains in focus segments driving Core PPoP growth, leading to strong re-rating potential. It highlighted Kotak Mahindra Bank as an "underappreciated franchise" and identified it as one of its preferred picks alongside ICICI Bank, noting that it has protected NIMs much better than peers. "With loan growth re-accelerating and continued cost-to-income improvement driven by operating leverage, we see the bank well positioned for a strong earnings’ recovery over the medium term," the report added.

HDFC Bank

Goldman Sachs initiated coverage on HDFC Bank with a ‘Buy’ call and a target price of Rs 861 apiece, implying 18% upside potential from the stock’s previous closing price of Rs 726.95 apiece on NSE. Goldman Sachs noted the bank’s core-PPOP inflection driven by margins and operating leverage, along with attractive valuations. The brokerage initiated coverage at 'Buy' on compelling valuations, despite expecting further downside earnings revisions. It expects PPOP growth to inflect in FY27, and highlighted that "even assuming HDFC Bank grows at 1.2x to 1.3x nominal GDP and delivers operating leverage, the bank can compound earnings at a 15% run-rate over the medium term. At 11x FY28 P/E, we believe valuations are unlikely to de-rate further, meaning stock returns should, at a minimum, mirror this earnings compounding."

Axis Bank

Goldman Sachs initiated coverage on Axis Bank with a ‘Buy’ call and a target price of Rs 1,477 apiece, implying 19% upside potential from the stock’s previous closing price of Rs 1,245.8 apiece on NSE. Goldman Sachs said cyclical headwinds are largely behind, and margins will recover in FY28. “We see a good risk-reward profile, supported by rebound in core PPoP growth to 18% CAGR during FY27-FY29 post muted 11% growth in FY27. Further, Axis has made good progress on reorienting the bank towards an eco-system led banking aided by significant investments in technology. If its digital platforms gain traction, there could be upside surprise on core PPoP growth and lead to material re-rating,” it said.

Federal Bank

Goldman Sachs named Federal Bank as one of its top banking picks among mid-sized private lenders. It initiated coverage on the stock with a ‘Buy’ call and a target price of Rs 425 apiece, implying 18% upside potential from the stock’s previous closing price of Rs 361 apiece on NSE. Describing the stock as ‘self-help story’, Goldman Sachs stated that its turnaround is underpinned by structural improvement in margins, fee income, cost-to-income and credit costs, with returns likely to be earnings-driven.

AU Small Finance Bank

Goldman Sachs initiated coverage on AU Small Finance Bank shares with a ‘Buy’ call and a target price of Rs 1,270 apiece, implying 15% upside potential from the stock’s previous closing price of Rs 1,108.20 apiece on NSE. It highlighted AU Small Finance Bank as a "differentiated franchise with strong underwriting and exposure to high-margin commercial retail profit pools”, with earnings outlook supported by loan growth, NIM expansion and cost discipline. It noted that strong earnings compounding will likely drive stock returns" and described the bank as offering "growth at a reasonable price."