Synopsis: CLSA has reiterated a Buy on HDFC Bank Limited with a ₹1,200 target, citing temporary concerns, stable loan and deposit growth, improving margins, and attractive valuation compared to ICICI Bank Limited.
This India’s largest private sector bank, engaged in providing retail and wholesale banking services, including loans, deposits, credit cards, wealth management, and digital banking solutions across India, and is in focus after CLSA gave a target of Rs. 1,200, which has an upside potential of 28.20 percent, while also highlighting that the stock is currently trading at a discount compared to ICICI Bank Limited.
With a market capitalization of Rs. 14,39,996.43 crores, the share of HDFC Bank Limited has reached an intraday high of Rs. 947.95 per equity share, rising nearly 1.21 percent from its previous day’s close price of Rs. 936.65. Since then, the stock has retreated and is currently trading at Rs. 936 per equity share.
News
CLSA, a prominent brokerage firm, has recommended a “Buy” call on HDFC Bank Limited with a target price of Rs. 1,200 per share, indicating an upside potential of 28.20 percent.
CLSA believes that the current concerns surrounding HDFC Bank Limited are largely temporary or misunderstood. The brokerage feels that issues related to margins, deposit growth, and post-merger adjustments have created short-term noise, which has weighed on investor sentiment despite the bank’s strong long-term fundamentals.
CLSA highlights that the bank’s core business performance remains stable. HDFC Bank reported 12 percent loan growth, marking its first double-digit expansion since the merger, while deposits grew at a healthy 11.5 percent, broadly in line with advances. Although the loan-to-deposit ratio rose to nearly 99 percent, above management’s near-term target, CLSA views this as a transitional phase rather than a long-term risk.
Market feedback indicates concerns around slower deposit growth and limited margin improvement after refinancing wholesale borrowings. However, CLSA believes margins are stronger than perceived and should gradually improve as the balance sheet normalises. The brokerage expects core pre-provision operating profit (PPOP) to grow at a high-teens CAGR, supporting earnings recovery.
From a valuation perspective, CLSA notes that HDFC Bank is currently trading at a 10-12 percent discount to ICICI Bank Limited. With FY27 expected to be a bounce-back year, CLSA views the current risk-reward as highly attractive and believes this is a good opportunity for investors to buy into a strong banking franchise.
HDFC Bank Business Updates for December 2025
HDFC Bank Limited reported steady business growth as of December 31, 2025. The bank’s advances under management stood at approximately Rs. 29,460 billion, registering a healthy growth of about 9.8 percent compared to Rs. 26,839 billion in the same period last year. This reflects continued demand for loans across key segments, supported by the bank’s strong customer franchise and diversified lending portfolio.
On the liability side, average deposits during the December 2025 quarter increased by around 12.2 percent year-on-year to Rs. 27,524 billion from Rs. 24,528 billion. Average CASA deposits grew by nearly 9.9 percent to Rs. 8,984 billion, compared to Rs. 8,176 billion a year ago. The steady rise in deposits and CASA balances highlights the bank’s ability to attract stable, low-cost funding while maintaining balance sheet strength.
Company Overview
HDFC Bank Limited, India’s largest private sector bank by market capitalization, provides comprehensive retail and wholesale banking services. Its offerings include savings accounts, deposits, home loans, personal loans, auto loans, credit cards, wealth management, and digital platforms like PayZapp and net banking.
The bank serves individuals, SMEs, corporates, NRIs, and rural customers through over 9,545 branches, emphasizing treasury operations, cash management, investment banking, and financial inclusion initiatives in semi-urban and rural areas.
Quarter Results
Coming into financial highlights, HDFC Bank Limited’s Net Interest Income has increased from Rs. 37,587 crore in Q2 FY25 to Rs. 40,252 crore in Q2 FY26, which has grown by 7.09 percent. The net profit has also grown by 9.32 percent from Rs. 18,627 crore in Q2 FY25 to Rs. 20,363 crore in Q2 FY26.
HDFC Bank Limited’s Net Interest Income and net profit have grown at a CAGR of 25.38 percent and 24.4 percent, respectively, over the last three years.
In terms of return ratios, the company’s ROCE and ROE stand at 7.51 percent and 14.4 percent, respectively. HDFC Bank Limited has an earnings per share (EPS) of Rs. 47.2, and its debt-to-equity ratio is 6.30x.
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