Following Q4FY26 earnings season, JM Financial has recently released its sector review note. The brokerage has drawn lines across its coverage universe, separating the preferred names in the list,

According to JM Financial, the sector ended FY26 with healthy loan growth and earnings resilience, and it has a positive outlook for FY27. “However, rates going up across may have negative impact on deposit mobilisation/rates and recent macro issues may have negative impact on asset quality in select sub-segments, which needs close monitoring,” it said.

The brokerage believes that banks with strong liability franchises, diverse loan books, and strong asset quality are best positioned to outperform. “Preferred names remain ICICI Bank, Axis Bank, SBI, CUBK, Ujjivan SFB, and DCB Bank,” JM Financial noted

Buy, sell or hold?

The pack with 'Buy' recommendations, in the private space, ICICI Bank Ltd and Axis Bank Ltd remain the top-tier picks, joined by City Union Bank Ltd and DCB Bank Ltd, while State Bank of India (SBI) is the sole public sector bank to secure a 'Buy' rating, while Ujjivan Small Finance Bank as the pick in the SFB category. 

The brokerage has an 'Add' rating on several counters. This includes private sector giants HDFC Bank Ltd and Kotak Mahindra Bank Ltd, alongside IndusInd Bank Ltd and Bandhan Bank Ltd. Bank of Baroda (BoB) among PSU pack in this category, while AU Small Finance Bank Ltd also had an 'Add' recommendation. 

On the flip side, JM Financial has taken a cautious stance on some lenders, issuing 'Reduce' or 'Sell' tags. Federal Bank Ltd and Equitas Small Finance Bank Ltd have both been given a 'Reduce' rating, accompanied by public sector lender Punjab National Bank (PNB). Meanwhile, YES Bank Ltd stands as the only stock to receive a 'Sell' recommendation from the brokerage post-Q4 numbers.