The lender’s net interest income (NII) grew around 3% YoY, coming in below estimates and trailing peers, while net interest margins (NIMs) remained under pressure.
Profit after tax (PAT) rose about 9% YoY, aided by lower operating costs and provisions.
HDFC Bank’s advances grew around 12% YoY, slightly lagging industry trends, while deposits increased 14% YoY, offering improved funding comfort. Asset quality strengthened, with gross NPAs at 1.15% and net NPAs at 0.38%, while capital adequacy remained strong at 19.7%.
However, certain overhangs persist. Leadership succession, including the upcoming renewal of the MD and CEO’s tenure, along with a pending chairman appointment, remains a key monitorable.
The legal review and the Dubai-related issue also remain unresolved, although management indicated supportive regulatory observations.
ALSO READ | 3 cos will see shares worth nearly ₹40,000 crore free up for trade today
Brokerages constructive on HDFC Bank stock
Morgan Stanley has an ‘Overweight’ rating with a price target of ₹1,025. The brokerage said a 4% PAT beat versus its estimates, driven by sharply lower provisions and operating costs, which offset slightly weaker core revenue.
It added that loan growth remains the key focus, with the loan-to-deposit ratio no longer a constraint, and sees the bank as a preferred pick amid geopolitical uncertainty.
CLSA, with an ‘Outperform’ rating and a price target of ₹1,200, described the quarter as steady in a somewhat challenging environment. It highlighted a decline in the loan-to-deposit ratio to 95% from 99% in the previous quarter.
Nomura maintains a ‘Buy’ rating with a price target of ₹950, citing softer NIM performance but a PAT beat driven by lower credit costs. It emphasised deposit growth as critical in a tight liquidity environment and flagged leadership continuity as an important factor to watch.
The brokerage expects return on assets and return on equity of 1.8% and 14%, respectively, over FY27-28.
Bernstein has an ‘Outperform’ rating with a price target of ₹1,150. It said that while there was no dramatic improvement, the bank delivered a stable performance amid ongoing balance sheet adjustments.
Margins showed sequential resilience, and profitability remained steady with return on assets at 1.9% and EPS growth of 9% YoY.
UBS maintains a ‘Buy’ rating with a price target of ₹1,175 and expects return on equity of 14-15% over FY27-28.
JPMorgan, with an ‘Overweight’ rating and a price target of ₹990, expects NII growth to accelerate in FY27-28, supported by improving credit growth and easing funding costs.
However, it flagged that a decline in the liquidity coverage ratio to 114% could limit balance sheet flexibility in the near term.
All 47 analysts tracking HDFC Bank have a consensus ‘Buy’ rating on the stock.
Shares of HDFC Bank ended 0.5% higher at ₹800 on Friday ahead of the results, though the stock remains down 5.5% over the past month.
