India's largest private lenders are struggling to justify their historical valuation premiums, even as the country remains the fastest-growing major economy.
HDFC Bank, Kotak Mahindra Bank, and Axis Bank have collectively underperformed global banking peers in the post-pandemic recovery, with investors increasingly questioning the sustainability of their price-to-book multiples.
5%. This split action underscores the market's selective approach to Indian banking stocks, driven by differing assessments of asset quality and growth trajectories.
The divergence in performance has become stark in recent trading.
Shares of HDFC Bank and Axis Bank rose as much as 2.5% in Monday's session, while Kotak Mahindra Bank fell by up to 3.5%.
This split action underscores the market's selective approach to Indian banking stocks, driven by differing assessments of asset quality and growth trajectories.
According to analysis from Hindu Businessline, the underperformance reflects a broader "valuation boomerang" where high initial multiples have not been supported by commensurate earnings growth.