Actions of HDFC Bank fell over 5 per cent on Monday after the private lender’s first-quarter profits failed to impress investors, wiping out nearly Rs 70,000 crore of market value, even as brokerages remained bullish on the stock.
HDFC Bank fell to an intraday low of Rs 774.55 apiece on the NSE, with its market capitalization falling to less than Rs 11.93 lakh crore. This came after the Indian private lender on Saturday reported a 5 per cent year-on-year (y-o-y) increase in its net profit at Rs 19,060 crore for the April-June quarter of the current financial year 2027.
The bank’s net interest income, which is the difference between interest earned and interest expenses, rose 7 per cent YoY to Rs 33,534 crore in Q1 FY27 from Rs 31,438 crore in Q1 FY26. HDFC Bank’s gross non-performing assets (NPAs) fell over 3 per cent YoY to Rs 35 846 crore, but net NPA increased marginally to Rs 12,357 crore during the quarter under review.
Jefferies on HDFC Bank share priceJefferies maintained its ‘Buy’ call on HDFC Bank shares with a price target of Rs 1,050 a piece. This implies an upside potential of over 28% from the stock’s previous closing price of Rs 819.6 a piece.
HDFC Bank remains one of the top picks at the international brokerage, while noting that the company’s profits for the June quarter were in line with estimates as the slight shortfall on NII was offset by lower operating and credit costs. The bank’s desire to participate in corporate lending lifted loan growth to 16% year-on-year, but caused NIMs to decline by 12 basis points quarter-on-quarter, limiting NII growth to 7%, Nomura said, adding that slower growth in operating expenses (slow branch and staff growth) and lower credit costs (low slippage) contributed to earnings.
“We are adjusting earnings estimates for FY27 and FY29. Improving margins are expected to support earnings which are expected to grow at 15% CAGR in PBT (excluding cash/exceptional items) in FY26-29 with ROE of 13% in FY27. Valuations at 1.8x adjusted PB for FY27 and 14x PE are attractive,” added Jefferies.
Nomura on HDFC Bank share priceNomura also has a ‘Buy’ call on HDFC Bank shares, with a price target of Rs 950 apiece, implying an upside potential of almost 16%. The international brokerage firm noted that the bank reported performance largely in line with Q1FY27.
“We are increasing our loan/deposit growth estimates for FY27F to 16%/17% (from 13%/15%). EPS estimates for FY27-28F are largely unchanged as lower revenue is offset by lower provisions and operating expenses. On the FCNR(B) program, management expects to gain a healthy market share, although it has not disclosed any quantum. “Continuity of leadership and execution of the FCNR remain, in our view, key elements to monitor in the short term,” he added.
Read also | HDFC Bank shares fall 5% after Q1 results. Should you buy, sell or hold the shares?
Anand Rathi on HDFC BankAnand Rathi Share and Stock Brokers has a ‘Buy’ rating on HDFC Bank shares and a price target of Rs 963 each, implying an upside potential of over 17% from the stock’s previous closing price.
The domestic brokerage noted that despite some acceleration in loan growth to 15.5% year-on-year, HDFC Bank’s credit growth remained much lower than its peers such as ICICI Bank and Axis Bank. “HDFC Bank has not been able to close the post-merger gap with ICICI on key operational indicators including NIM, loan growth and CASA ratio. Given that CASA growth continues to lag behind loan growth, we believe it will take more time for the bank to narrow the funding cost gap with ICICI. Therefore, we do not expect loan growth or RoE to sustainably exceed 14 % in the medium term, further, we see some uncertainty around the extension of the current CEO’s tenure by the RBI, given recent developments in the medium term, he said.
Nonetheless, Anand Rathi maintained his ‘BUY’ rating, supported by reasonable valuations and sector tailwinds. Among large-cap private banks, it continues to prefer Axis Bank and ICICI Bank.Motilal Oswal on HDFC Bank share priceMotilal Oswal also reiterated his ‘Buy’ rating on HDFC Bank shares, with a price target of Rs 2,050, implying an upside of around 28 per cent. The national brokerage said the private lender reported a largely in-line quarter, supported by healthy business growth and lower provisions, although net interest margin (NIM) remained the main disappointment, contracting 12 basis points quarter-on-quarter to 3.26 per cent. Loan growth was driven by the SME and corporate segments, while retail lending remained relatively subdued.
JM Financial on HDFC Bank share priceJM Financial maintained its Add rating on HDFC Bank with a revised price target of Rs 900, implying an upside of around 10%. Although the domestic brokerage said the bank’s liquidity coverage ratio (LCR) of 115% and a credit-to-deposit ratio of around 96% limits its ability to accelerate loan growth, it remains optimistic about the bank’s medium-term margin outlook, expecting NIM to improve as high-cost borrowing gradually depletes.
Read also | HDFC Bank Q1 Results: Net profit up 5% YoY to Rs 19,060 crore, NII up 7%
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
