Indian banks: are ICICI and Kotak worth buying?
2026-07-08 · By Lubin Danilo, founder of Lubin Investment
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ICICI Bank and Kotak Mahindra Bank are among the best-scoring banks in my screener, with 8 and 9 out of 10 criteria validated. Kotak stands out with no real weak spot and a price that stays reasonable. A massive, fast-growing banking market that French investors almost entirely ignore.
Key takeaways
- ICICI Bank: 8/10, 24.3% profitability, 19.7% annual sales growth.
- Kotak Mahindra Bank: 9/10, no real failing criterion, earnings per share growing 67% a year.
- Both banks fund their growth without net debt (net cash position).
- Kotak trades at 9.2 times free cash flow, ICICI at 14.4 times, versus a sector median of 11.7 times.
- Axis Bank, the third major Indian bank, doesn't pass my cash profitability filter.
| Bank | Score /10 | P/FCF | Sales growth/yr | Net margin |
|---|---|---|---|---|
| Kotak Mahindra Bank (KOTAKBANK) | 9/10 | 9.2x | 14.6% | 24.7% |
| ICICI Bank (ICICIBANK) | 8/10 | 14.4x | 19.7% | 24.3% |
| Axis Bank (AXISBANK) | 7/10 | not calculable | 12.2% | 29.9% |
Why look at India
India has over 1.4 billion people and a middle class adopting banking products (accounts, loans, cards) at a pace Europe or the US haven't seen in decades. Major private Indian banks benefit directly: they post double-digit revenue growth, well above what you find in Western banking. It's a market almost entirely off the radar of French retail investors, even though fundamental quality there is real.
Kotak Mahindra Bank: the strongest of the three
Kotak Mahindra Bank scores 9 out of 10 in my screener, with no real failing criterion: profitable at a 24.7% net margin, sales growing 14.6% a year, and above all, earnings per share that grew 67% a year on average over five years. Its net debt is negative, meaning the bank holds more cash than debt. It trades at 9.2 times free cash flow, below its sector median (11.7 times), with a roughly 34% discount versus what my model considers fair.
ICICI Bank: almost as strong, a bit pricier
ICICI Bank validates 8 out of 10 criteria: a 24.3% net margin, 19.7% annual sales growth, the fastest of the three banks here, and 28.5% cash profitability. Its relative weak spot: it trades at 14.4 times free cash flow, above the sector median, which shows up as a slight overvaluation in my model. Several criteria (EPS growth, expanding margins, collection period) remain uncalculable with available data, a common limitation for foreign financial stocks rather than a real negative signal.
What about Axis Bank?
The third major private Indian bank, Axis Bank, doesn't pass my cash profitability filter: its free cash flow margin came out negative over the measured period, which even prevents calculating its valuation under my method. Its accounting net margin stays high (29.9%), but the gap between reported profit and real cash generated is exactly the kind of signal I never let pass without digging further.
What I take from this
Kotak Mahindra Bank is, on my criteria, the strongest and cheapest of the three Indian banks. ICICI Bank isn't far behind on quality, with faster growth, but at a somewhat richer price. These two names illustrate well why I always look beyond the most-followed markets: fundamental quality doesn't stop at the S&P 500's borders.
FAQ
Which is the best Indian bank under your method?
Kotak Mahindra Bank, with 9 out of 10 criteria validated, no real failing point, and a price below its sector median.
Is ICICI Bank undervalued?
Not under my model: it trades at 14.4 times free cash flow, above the 11.7 times sector median, which shows up as a slight overvaluation.
Why isn't Axis Bank recommended here?
It doesn't pass my cash profitability filter: its free cash flow margin is negative over the period, despite a high accounting net margin.
Why are Indian banks so little covered in France?
They're foreign stocks, priced in rupees, outside the indexes most French retail investors follow. Fundamental quality there is nonetheless real and measurable with the same objective criteria as any stock.
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About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).