With the Q1 earnings season knocking on the door, Motilal Oswal Financial Services said that its channel checks signal towards a strong MSME credit demand in the April-June quarter of the ongoing FY27, with an increase in the working capital cycle. Private banks' share is higher among higher ticket sizes, while public sector banks are gaining incremental market share with competitive pricing and CGTMSE-backed lending, the domestic brokerage added. The demand for unsecured business loans has picked up, while housing loans are slowing down, although asset quality has held up despite an inflationary environment, according to the domestic brokerage.
HDFC Bank was named as one of Motilal Oswal’s top picks in the banking sector. The domestic brokerage said that the private lender is faring well in the HCV and MHCV segments. It is also among its top picks for loan against property segment, and in terms of asset quality. The shares of India’s largest private lender gained over 7% in one month but declined 20% in 2026 so far. Motilal Oswal has a ‘Buy’ call on the shares of HDFC Bank with a target price of Rs 1,100 apiece.
ICICI Bank was also one of Motilal Oswal’s top banking sector picks in the loan against property segment, and in terms of asset quality. “ICICI Bank continues to have a competitive edge on the back of superior tech capabilities and offers better overdraft facilities,” the domestic brokerage said. It along with HDFC Bank are Motilal’s top private sector picks with a profitable growth trajectory alongside robust asset quality. It has a ‘Buy’ rating on the shares of ICICI Bank with a target price of Rs 1,750 apiece.
State Bank of India (SBI) was Motilal's preferred PSU pick for its all-round execution and healthy growth trajectory. It is also its top pick in the housing loans segment. “Among the PSBs, SBI remains the most aggressive, offering competitive pricing, improved TAT, and lending under the CGTMSE scheme. Lending based on the CGTMSE scheme involves continuous monitoring of stock reports, cash flows, and debtor lists, reflecting strong underwriting practices,” Motilal Oswal Financial Services said. It has a ‘Buy’ call on the shares of SBI, with a target price of Rs 1,300 apiece.
AU Small Finance Bank was named the fourth top banking pick by Motilal Oswal Financial Services. It remains a strong player in the retail segment, according to the domestic brokerage, which added, "Among the mid-size banks, AUBANK remains a preferred pick with industry-leading growth, a granular asset book, and strong collection infrastructure." Motilal Oswal has a 'Buy' rating on the shares of AU Small Finance Bank with a target price of Rs 1,275 apiece.
Axis Bank holds a significant market share among the smaller wholesale players in Surat's textile industry, Motilal Oswal Financial Services said. It added that these players are facing stretched working capital limits and are operating with reduced profit margins. The domestic brokerage has a ‘Neutral’ rating on the shares of the company with a target price of Rs 1,475 apiece. Motilal has 'Buy' calls on the shares of Bandhan Bank, DCB Bank, Equitas Small Finance Bank, RBL Bank and Kotak Mahindra Bank as well.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
