After declining nearly 20 per cent in 2026, shares of HDFC Bank, India’s largest private sector lender, appear to be staging a recovery, gaining over 12 per cent in the past month. However, with the stock rebounding from its recent lows, investors are keen to know whether the rally has further room to run and if HDFC Bank still remains an attractive buying opportunity at current levels.
In its latest note, global brokerage firm Citi has raised its share price target for HDFC Bank by 7 per cent to Rs 940 from Rs 880. The revised target implies an upside potential of approximately 16 per cent from the stock’s current market price of Rs 812.30.
Citi’s revised share price target signals a positive outlook on the banking stock, suggesting that the recent recovery could have further room to run. However, investors will need to assess the brokerage’s underlying rationale and the bank’s growth prospects before making an investment decision.
HDFC Bank Outlook: Why is Citi bullish on HDFC Bank?
One of the key factors supporting Citi’s positive outlook is its expectation of 15 per cent loan growth in FY27. The brokerage expects growth to be driven by the SME, small and mid-market, and unsecured retail segments.
Citi also sees a recovery in return on equity (ROE) to above 15 per cent as a key medium-term priority for the bank, particularly following the profitability pressures after the merger.
Another factor that could support the bank’s earnings recovery is deposit repricing and refinancing. Citi believes these will be important drivers of a gradual improvement in the bank’s net interest margin (NIM).
Despite these pressures, Citi believes stable asset quality, with credit costs expected to remain at 0.4-0.5 per cent, could support the recovery. Key risks include slower deposit mobilisation, weaker loan growth and a delayed NIM recovery.
Analyst take on HDFC Bank valuation
On HDFC Bank’s valuation, Kranthi Bathini believes the stock is fairly valued based on its book value and key financial parameters.
“HDFC Bank is fairly valued with respect to its books and also with respect to its key parameters,” Bathini said.
He added that the stock still has room for gains, although investors have remained cautious following the bank’s prolonged consolidation phase and concerns over leadership after the merger.
“Still, the stock can rally from this level also 10 to 15 per cent. It has the potential,” he said, adding that the next couple of quarters will be crucial for assessing credit growth, revenue expansion and profitability under the new leadership.
Why has HDFC Bank been in the spotlight?
HDFC Bank has been in the spotlight as a series of governance, compliance, leadership and post-merger issues have converged at India’s largest private sector lender. The concerns stem not from any single event but from a combination of the chairman’s abrupt exit, alleged payment irregularities, overseas product-related disputes and weaker-than-expected profitability following the HDFC Ltd merger.
Former part-time chairman Atanu Chakraborty resigned in March 2026, saying that practices he had observed over the preceding two years were inconsistent with his personal values and ethics.
The bank’s leadership has undergone changes amid these issues. CEO Sashidhar Jagdishan’s departure and the appointment of Anup Bagchi have brought succession planning, management stability and the incoming leadership’s ability to restore confidence into focus.
HDFC Bank Stock Technical performance
On the technical front, HDFC Bank shares are facing resistance at their four-year exponential moving average (EMA) of Rs 816 on a spot basis, according to Vipin Kumar, AVP, Equity Research at Globe Capital Market Ltd.
Kumar said a decisive breakout above Rs 816 could trigger further buying interest, potentially taking the stock towards Rs 845 and subsequently Rs 880 in the near term.
On the downside, sustained trading below Rs 790 could invite profit-booking, dragging the stock towards the Rs 760-750 zone.
Thus, the Rs 790-816 range remains crucial for the stock’s near-term price movement, with a breakout above resistance or a breach of support likely to determine its next directional move.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)