Citi Research remain positive on banks. But with fuller valuations & top-down gains done, the next leg of gains need a bottom-up & BS response and will come more slowly. 'Our top pick is now HDFC Bank, with SBI, ICBK and Axis for asset quality leverage. And the pricier Yes & IIB as potential growth and margin up-tick leaders. We raise target prices, primarily on roll forward to Sep 16, measured multiple raises and higher insurance biz values,' it said.

1. HDFC Bank - Upgrade to Buy
Raise target price to Rs 1,325

'HDBK's is probably best positioned to ride India's growth up-cycle, as it plays out. It has raised capital, has no asset quality, coverage issues, and a significant deposit, branch franchise to support growth. While it remains a credit conservative player, an up-cycle will lend it disproportionate opportunities, particularly relative to peers.'

2. Yes Bank - Upgrade to Buy
Raise target price to Rs 1,025

'YesB does have its share of risks-small size, large wholesale funding (albeit well tested in recent times), some asset challenges, which have not gone away, and concentrated fee incomes. These would still leave YesB more vulnerable than peers in an economic reversal, or with any business slip-ups.'

3. AXIS Bank - Maintain Buy
Raise target price to Rs 720

'This is a function of a higher target multiple and a roll forward of the benchmark to Sep16. Our higher multiple for Axis Bank is driven by its recent growth improvement, some stability on asset quality and continued strength in the retail business.'

4. Indusind Bank - Maintain Buy
Raise target price to Rs 1,050

'We raise our Target Price for Indusind Bank to Rs1,050. This is a function of a higher target multiple and a roll forward of the benchmark to Sep 16. Our higher multiple for Indusind Bank is driven by its ability to maintain high growth levels in a tough economic environment. Additionally, Indusind has displayed continued traction on CASA, high return ratios and strong asset quality.'

5. Kotak Mahindra Bank - Maintain Buy
Raise target price to Rs 1640

'We raise our Target Price for Kotak Mahindra Bank to Rs 1,640. This is a function of a higher target multiple and a roll forward of the benchmark to Sep16. We also assign higher multiples to the insurance business in line with recent transactions in the space and at par with other private sector insurance business valuations. Our higher valuation multiple for Kotak Mahindra Bank is driven by its higher growth levels in a tough economic environment. Kotak has displayed continued traction on CASA and strong asset quality and is in the process of completing a good acquisition (ING Vysya) which will provide its core lending business a boost.'

6. Housing Development Finance - Maintain Neutral
Raise target price to Rs 1,500

'We also assign higher multiples to the insurance business in line with HDFC's recently-concluded stake sale transaction and factor in a higher target price for HDFC Bank in our SOTP.'

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