The merger between HDFC Bank and ICICI Bank is expected to narrow the valuation gap between the two banks. Historically, HDFC Bank has commanded a higher valuation premium, but in recent years, ICICI Bank has shown consistent earnings performance and growth. Post-merger, HDFC Bank s net interest margin is expected to decline due to an increase in the share of mortgages in its loan mix. However, HDFC Bank s investment thesis remains solid, with the bank confident of sustaining healthy loan growth. Despite being bullish on HDFC Bank, most analysts predict similar valuation multiples for both banks in the near to medium term.