Macquarie’s latest note released on September 30 predicts a 18% rise in FY28 EPS for Indian banks, driven by a 15‑basis‑point bump in net interest margins. The projection sits above the 12‑month consensus of 12% and signals that banks are poised to benefit from tighter credit spreads.
Banks are currently trading at roughly 1.3× their FY28 price‑to‑book and 10× their FY28 price‑to‑earnings—sub‑sector averages that hover near 12× P/E and 1.6× P/B. The valuation gap suggests a re‑rating window, especially for private‑sector lenders that have shown margin tightening and cost discipline.
Among the brokerage’s top picks, Bank of Baroda has been upgraded to outperform with a ₹280 target, implying a 22% upside from current levels. Kotak Mahindra Bank’s target rises to ₹500 from ₹450, while ICICI Bank, State Bank of India and City Union Bank remain on the firm’s radar. Paytm’s rating is bumped to outperform with a ₹2,025 target, whereas PB Fintech is trimmed to neutral at ₹1,150.
Macquarie expects a 75‑basis‑point rate hike over the next 9–12 months as the Fed tightens, which should feed further margin expansion. Coupled with resilient loan demand, eased liquidity constraints, and healthy asset quality, the outlook supports the projected margin gains and EPS trajectory.