Reliance Industries, ICICI Bank, and HDFC Bank released their Q1 FY26 earnings, with ICICI Bank emerging as the clear winner. Discover how these results impact market trends, loan growth prospects, and what investors should watch for in 2025. Don’t miss the key insights!

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Mumbai, July 21, 2025 — The Q1 FY26 earnings season has kicked off with significant results from three Indian market heavyweights: Reliance Industries, ICICI Bank, and HDFC Bank. These companies, which collectively account for nearly 30% of the Nifty 50 index, have set the tone for market sentiment, with ICICI Bank leading the pack, while Reliance and HDFC Bank delivered mixed but stable performances. Here’s a deep dive into their earnings, their impact on the market, and what lies ahead for investors.

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Reliance Industries: Steady but Mixed Performance

Reliance Industries, India’s largest company by market capitalization, reported a consolidated profit of ₹26,994 crore for Q1 FY26, a significant jump from ₹15,138 crore in the same quarter last year. However, the results were tempered by weaknesses in its oil-to-chemicals (O2C) and retail segments, which underperformed due to lower refining margins and subdued crude throughput. Despite this, Reliance’s telecom arm, Jio, delivered standout growth, with expectations of 10-13% revenue growth driven by potential tariff hikes. The company’s focus on green energy and optimistic guidance for 2029, aiming to double its income, has kept investors hopeful.

Brokerages like Morgan Stanley maintained an “Overweight” rating with a target price of ₹1,617, citing stable petrochemical margins and telecom growth as key drivers. However, concerns over high capital expenditure (₹29,887 crore) and a net debt of ₹1.18 lakh crore remain. Analysts suggest that while the results were in line with expectations, long-term investors could find value if the stock dips, especially with potential demergers on the horizon.

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ICICI Bank: The Star Performer

ICICI Bank emerged as the standout performer, reporting a 15.5% year-on-year increase in standalone net profit at ₹12,768 crore, surpassing CNBC-TV18’s poll estimate of ₹11,747 crore. Net interest income (NII) rose 10.6% to ₹21,635 crore, driven by robust retail banking and improved net interest margins (NIMs) of 4.34%. The bank’s asset quality remained stable, with gross non-performing assets (GNPA) at 1.67% and net NPA at 0.41%. Provisions increased to ₹1,814 crore, reflecting prudent risk management.

ICICI Bank’s loan book grew 11.5% year-on-year, with strong traction in business banking (up 30%) despite slower retail loan growth (7%). The bank’s management is optimistic about double-digit loan growth in FY26, supported by festive season demand and falling interest rates. Motilal Oswal reiterated a “Buy” rating with a target price of ₹1,600, citing ICICI’s consistent 16% loan CAGR, robust asset quality, and a provisioning coverage ratio (PCR) of 77%. Analysts believe ICICI Bank is well-positioned to navigate margin compression and maintain profitability in a low-rate environment.

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HDFC Bank: Stable but Cautious

HDFC Bank reported a steady performance, with profitability boosted by a jump in other income and contributions from its subsidiary, HDB Financial Services. However, provisions surged to ₹14,441 crore, including a ₹9,000 crore floating provision, reflecting cautious risk management. Loan growth was modest at 8.1% year-on-year, trailing deposit growth (14%), as the bank focused on reducing its loan-deposit ratio. Asset quality remained stable, with GNPA at 1.67% and net NPA at 0.41%.

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Analysts noted that HDFC Bank’s net interest margin (NIM) of 3.54% is expected to stabilize around 3.4-3.5% in FY26, with margin recovery anticipated post-merger streamlining. Motilal Oswal maintained a “Buy” rating with a target price of ₹2,050, highlighting the bank’s strong deposit growth and improved retail and commercial banking mix (81% of the portfolio). The announcement of a potential bonus share issue also boosted investor sentiment. However, slower loan growth compared to peers remains a near-term concern.

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Market Impact and Outlook

The Indian stock market opened flat on July 21, 2025, as gains in HDFC Bank (up 2%) and ICICI Bank (up 2.5%) offset losses in Reliance Industries (down 2%). The Nifty 50 rose 0.37% to 25,057.2, while the BSE Sensex gained 0.45% to 82,123.04. The financial sector, a key market driver, saw a 1.2% jump, underscoring the importance of banking heavyweights. However, broader market sentiment remains cautious due to global uncertainties, including U.S.-India trade deal talks and slowing credit growth.

Looking ahead, analysts expect a recovery in credit growth to 11.5% by FY26, supported by RBI’s 100-basis-point CRR cut and improving liquidity. ICICI Bank is the clear favorite, with its strong fundamentals and digital initiatives positioning it as a leader in the banking sector. Reliance Industries’ long-term prospects hinge on its green energy pivot and telecom growth, while HDFC Bank is expected to deliver steady growth as it navigates post-merger challenges. Investors are advised to monitor festive season demand, RBI policies, and global trade developments for further cues.

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Comparative Table: Q1 FY26 Financial Highlights

Company	Net Profit (₹ Cr)	YoY Profit Growth	NII (₹ Cr)	NIM	Loan Growth (YoY)	GNPA	Provisions (₹ Cr)
Reliance Industries	26,994	78.3%	N/A	N/A	N/A	N/A	N/A
ICICI Bank	12,768	15.5%	21,635	4.34%	11.5%	1.67%	1,814
HDFC Bank	17,616*	6.7%*	N/A	3.54%	8.1%	1.67%	14,441

*Note: HDFC Bank’s Q4 FY25 figures used for comparison due to limited Q1 FY26 data availability.

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FAQs

1. How did ICICI Bank perform compared to HDFC Bank in Q1 FY26?
ICICI Bank outperformed HDFC Bank with a 15.5% year-on-year profit growth and 11.5% loan growth, compared to HDFC’s 6.7% profit growth and 8.1% loan growth. ICICI’s stable asset quality and higher NIM (4.34% vs. 3.54%) make it a stronger pick.

2. Why did Reliance Industries’ stock decline despite strong profits?
Reliance’s stock fell 2% due to weaknesses in its oil-to-chemicals and retail segments, which offset its robust telecom performance. Brokerages flagged concerns over refining margins and high capital expenditure.

3. What are the key factors driving market sentiment post-earnings?
The market is driven by strong banking sector performance, particularly from ICICI and HDFC Bank, offset by Reliance’s mixed results. Global trade uncertainties and RBI’s rate cuts are also influencing investor caution.

4. Is ICICI Bank a good investment after Q1 FY26 results?
Analysts rate ICICI Bank as a “Buy” with a target price of ₹1,600, citing its strong loan growth, stable asset quality, and digital initiatives. It’s seen as a top pick for long-term investors.

5. What should investors watch for in the coming quarters?
Monitor festive season demand, RBI’s monetary policies, margin recovery in banks, and Reliance’s green energy and telecom growth. Global trade developments, especially U.S.-India talks, will also be critical.

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Disclaimer:
The information provided in this article is for informational and educational purposes only and should not be construed as investment advice. Stock market investments are subject to risks, and past performance is not indicative of future results. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions. The views and recommendations expressed are those of analysts and brokerage firms cited in the sources, not the publisher

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