New Delhi, Oct. 11 -- A 25-basis-point repo rate hike by the Reserve Bank of India (RBI) could expand large banks' net interest margins (NIMs) by up to 10 basis points and lift earnings per share (EPS) estimates by as much as 5 per cent, according to a report by IIFL Capital.

The Monetary Policy Committee (MPC) unanimously raised the repo rate by 25 basis points to 5.5 per cent and shifted its policy stance from 'neutral' to 'calibrated tightening.'

The brokerage estimates that a 25-basis-point rate hike could expand net interest margins (NIMs) of larger banks by 6-10 basis points and boost earnings per share (EPS) estimates by 3-5 per cent.

"Our sensitivity analysis suggests a 25bps rate hike should drive 6-10bps NIM expansion and 3-5...