ET Now began the discussion with IndusInd Bank, highlighting the debate around the lender’s ambition to achieve a 1% return on assets by FY27 and whether that target is realistic.
Responding to this, Shah first offered a disclosure, stating, “A small disclosure before we go any further that all recommendations are a part of our fundamental research team, long-term recommendations. Our company Geojit or myself do not have any kind of investment, any kind of financial interest, no conflict of interest, but we give advice to our clients on similar lines. They might have their investment interest.”
Commenting on recent performance, Shah said that among Axis Bank, Kotak Mahindra Bank and IndusInd Bank, the latter had delivered a weaker quarter, largely due to elevated gross and net non-performing assets. However, he acknowledged the bank’s efforts on recoveries, adding that the fourth quarter could show some improvement. While he stopped short of calling it a turnaround quarter, Shah said the outlook into the next financial year appears more encouraging.
“As a disclosure, we have positive coverage on all the three banks — IndusInd, Axis, as well as Kotak,” he said, adding that loan book growth across the sector is expected to remain strong, supported by rising credit demand and cumulative interest rate cuts of around 1.25% over the past year. According to Shah, this backdrop should benefit the entire BFSI universe, including public sector banks, private lenders and well-capitalised NBFCs.
ET Now then turned the focus to net interest margins, noting that both Axis Bank and Kotak Mahindra Bank have flagged potential pressure on margins in the fourth quarter following the December repo rate cut.
Shah acknowledged the concern, saying that maintaining NIMs could be challenging for some banks in a one-off quarter. “A lot depends upon the cost of borrowing and cost of lending,” he noted. However, he cautioned investors against reacting too sharply to short-term fluctuations. “One-off quarters should not be a reason to deviate from your long-term investment objectives,” Shah said, adding that while companies and sectors may face temporary headwinds, the broader trajectory for BFSI remains intact.Looking ahead, he said the new financial year beginning April 1, 2026, is expected to be positive for the sector as a whole.
From a shareholder’s perspective, ET Now asked whether investors should consider buying banking stocks after the earnings announcements.
Taking a long-term view, Shah said Geojit remains constructive on several private sector banks, naming HDFC Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, IDFC First Bank and City Union Bank as stocks with positive coverage.
Among public sector banks, he pointed to State Bank of India, Bank of Baroda, Bank of India, Canara Bank, Indian Bank and Union Bank of India, noting that these lenders have reported a stellar set of numbers. Shah also highlighted strong performance across the NBFC space, citing Shriram Finance, L&T Finance, Mahindra Finance and Bajaj Finance.
In the small finance bank segment, he said Geojit remains positive on AU Small Finance Bank and CreditAccess Grameen.
Summing up his view, Shah said that investors with equity exposure should consider allocating a dedicated portion of their portfolio to the BFSI segment, given its improving fundamentals and long-term growth prospects.
