HDFC Bank Ltd. share price target

CD ratio continued to moderate with slowdown in credit growth, while deposit growth higher than system growth

HDFCB saw soft quarter as core PAT was 3.0% lower to PLe due to lower fees and NII. Adjusted for tax refund, NIM at 3.53% was 4bps lower to PLe. However, asset quality was better as GNPA declined by ~8bps QoQ to 1.33% owing to lower net slippages. LDR declined over FY24 to FY25 from 104.5% to 96.5% but further reduction may happen at a slower pace in FY26 as credit growth would pick-up. Bank has guided to reach LDR of 85-90% in FY27; we are factoring LDR to reach 92.5%/89.0% in FY26/27E which would imply a loan CAGR of 10%. Due...

We maintain our BUY recommendation on the stock.

HDFC Bank (HDFCB) reported a 4QFY25 net profit of INR176.2b (7% YoY growth; in line). The bank’s NII grew 10.3% YoY to INR320.6b (5% beat), boosted by strong loan growth and INR7b of interest on IT refunds.

After growth calibration for the past one year, and under pressure to bring down LDR and manage PSL/margins, HDFC Bank reported better credit growth in 4Q at 5% YoY/4% QoQ as well as stable core margins.

HDFC Bank (HDFCB) reported Q4FY25 PAT of INR 176bn (RoA steady at ~1.9%) led by stable core NIM QoQ and contained opex. Deposits growth (14% YoY) remains driven by term deposits (20% YoY) while CA grew 18% QoQ (up 1% YoY) due to seasonality.

Q4FY25 numbers were decent with slight beat on earnings led by NIM expansion. NII at Rs. 32,066 crore (up 10% y-o-y/5% q-o-q) above estimates, led by higher NIMs. NIMs improved by 11 bps q-o-q to 3.54%, however excluding the impact of an ITR refund, core margins rose by 3 bps q-o-q.

We maintain our BUY recommendation on the stock.

HDFC Bank reported a slight miss (of 2%) on PAT, which came in at Rs167bn/1.8% RoA, primarily due to slower credit growth and higher provisions. Deposit growth remains healthy at 16% YoY/2.5% QoQ (up by Rs0.6trn QoQ), but credit growth fell to a new low of 3% YoY as the bank focused on LDR management (down by160bps QoQ to 98%).

CD continued to decline, while advances growth is likely to be lower than system for FY25, in line for FY26 and faster in FY27

Q3FY2025 numbers were broadly in line given the transition period. NII at Rs. 30,653 crore (up 8% y-o-y/2% q-o-q) in line with estimates, led by stable NIM of ~3.4% (marginally declined by 3 bps q-o-q led by interest income reversals on NPA agri portfolio) and net loan growth of ~1% q-o-q.

HDFC Bank (HDFCB) reported 3QFY25 net profit of INR167.4b (2.2% YoY growth, in line).NII grew 7.7% YoY to INR306.5b (in line). NIMs contracted 3bp QoQ to 3.43%.

HDFC Bank’s key focus remains on higher retail deposit mobilisation. The bank intends to bring down its CD ratio at a faster pace to 85-87% level; and as and when the credit cycle turns over the next couple of quarters, the bank wants to be well-positioned to capture the incremental growth that it has seen in the pre-merger period

HDFCB’s management reiterated its unwavering focus on customer satisfaction, arresting employee attrition, upgrading tech, and reducing regulatory friction.

HDFC Bank has largely outperformed its large private peers in the recent past, primarily on account of its relatively better margin, asset quality outcomes amid rising asset quality noises in unsecured loans.

We maintain our BUY recommendation on the stock