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Which banking stocks did Motilal Oswal pick?
Moneycontrol’s 5 October 2026 coverage of Motilal Oswal’s report named four top picks: ICICI Bank, SBI, Kotak Mahindra Bank and AU Small Finance Bank. The first three named in this headline are not the full list.
The brokerage’s reported rationale combines forecasts for credit and earnings growth with expectations that asset quality will remain benign. It also flags pressure on private-bank net interest margins (NIMs) and difficulty mobilising low-cost deposits. These are brokerage expectations, not realized results.
What CAGR did Motilal Oswal forecast?
Motilal Oswal forecast earnings CAGR of 15% for its banking coverage universe over FY26–28E, according to Moneycontrol. Within that outlook, the brokerage forecast 20% earnings CAGR for private banks and 11% for PSU banks over FY26–28. These figures describe forecast earnings growth; they do not estimate the stocks’ returns or guarantee any outcome for investors.
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What do the forecasts say about growth and margins?
Credit, deposits and funding
Motilal Oswal said system credit growth was 18.8% year on year as of 15 September 2026 and expected FY27E credit growth of around 15.5%. It reported system deposit growth of 17% year on year and a credit-deposit ratio of 80.8%. The brokerage linked the easing ratio partly to FCNR(B) inflows of $133 billion, which it said represented around 4.5% of system deposits.
The brokerage’s assessment was not unambiguously positive: it said low-cost deposit mobilisation remained challenging. Deposit growth and the credit-deposit ratio are system-level figures, not bank-specific forecasts for each of the four picks.
Rank #2
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2QFY27 earnings and NII estimates
For 2QFY27, Motilal Oswal expected private-bank PAT to grow 24% year on year and 1.7% quarter on quarter. For PSU banks, it expected PAT growth of 27% year on year and 19% quarter on quarter, alongside NII growth of 10.8% year on year and 1.6% quarter on quarter.
Its reported large-private-bank NII estimates include these bank-specific figures:
Rank #3
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| Bank | Expected NII growth, year on year | Expected NII growth, quarter on quarter |
| ICICI Bank | 16.8% | 3.1% |
| Kotak Mahindra Bank | 14% | 5.1% |
These are Motilal Oswal estimates reported for 2QFY27. The article does not supply matching individual NII or PAT figures for SBI or AU Small Finance Bank, so the sector-level PSU figures should not be read as SBI-specific estimates.
NIM pressure and possible support
Motilal Oswal expected NIM declines of 8–20 basis points for large private banks, associating the pressure with rapid business expansion, FCNR(B) inflows and leverage against those inflows. It said surplus-liquidity deployment and retirement of high-cost liabilities could support earnings growth. The brokerage also described the asset-quality outlook as benign and expected credit costs to remain in control.
Rank #4
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Does the report give target prices for ICICI Bank, SBI and Kotak?
Moneycontrol’s coverage does not disclose a current individual target price or valuation basis for ICICI Bank, SBI or Kotak Mahindra Bank. It therefore does not substantiate the “target price” part of the headline for those stocks. A target price is a brokerage estimate based on assumptions and valuation methods, not a guarantee that a share will reach that level.
SBI’s official analyst-coverage page separately listed a ₹1,370 Motilal Oswal target after Q1FY27, last updated 13 August 2026. That is a separate, earlier listing and is not verified as the target in the October report. It should not be presented as the October report’s current SBI target. No current individual target prices for ICICI Bank or Kotak Mahindra Bank are established by the cited coverage either.
Best Value
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How to read the picks as an investor
The reported estimates provide a sector outlook and selected bank-specific NII forecasts, not a complete side-by-side investment case for every pick. Before comparing the stocks, distinguish the brokerage’s forecasts from reported results and check the original dated note for each bank’s valuation assumptions, target price and risks.
Quick Recap
- Separate growth measures: The 15% banking-coverage CAGR and the private- and PSU-bank CAGRs are earnings forecasts, not expected share-price gains.
- Keep periods aligned: FY26–28E CAGR forecasts and 2QFY27 quarterly estimates answer different questions and should not be compared as if they were the same measure.
- Account for funding: Strong system credit growth alongside challenging low-cost deposit mobilisation can affect funding costs and margins.
- Do not fill gaps by inference: The coverage provides NII estimates for ICICI and Kotak, but not equivalent individual figures for all the named picks.
- Verify any target against its date and basis: A target listed in a separate earlier update is not proof of the target in the October report.
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