Synopsis:- A global brokerage has maintained a ‘Buy’ rating on a leading private sector bank with a target price of ₹1,200, indicating about 47% upside from ₹817.45. The bank also reported nearly 12% growth in deposits and advances, while asset quality remained stable with GNPA at 1.24%.
India’s private sector banks are fueling economic growth with innovative services and superior asset quality. They hold a 35% share of household deposits, up from 30% in FY2020, boasting healthier GNPA ratios at 1.8% versus the system-wide 2.2%. Deposits grew ~15% from FY2020 to H1 FY2026, reflecting strong branch productivity and digital adoption amid 10-11% credit expansion forecasts.
With a market capitalization of Rs 12,58,084.33 crore, the shares of HDFC Bank Ltd were trading at Rs 817.45 per share, decreasing around 1.81 percent as compared to the previous closing price of Rs 832.50 apiece.
Brokerage Recommendation
Global brokerage CLSA has maintained a ‘Buy’ rating on the bank with a target price of Rs 1,200, implying a potential upside of about 47% from Friday’s price of Rs 817.45 per share. The bullish outlook reflects the brokerage’s confidence in the bank’s growth prospects and improving earnings trajectory in the coming periods.
Rational
CLSA believes investors may gradually stop overanalysing HDFC Bank’s loan-to-deposit ratio, especially as the Reserve Bank of India is no longer placing strong emphasis on this metric. The brokerage expects the bank’s core pre-provision operating profit to grow at a CAGR of around 18% between FY26 and FY28, compared with nearly 12% growth recorded during FY24–FY26.
Meanwhile, this stronger profit trajectory could potentially support a re-rating of HDFC Bank’s stock. Currently, the bank trades at around 1.8 times price-to-book value and about 13 times one-year forward price-to-earnings. Therefore, improving profitability and easing concerns around key metrics may gradually strengthen investor sentiment toward the stock.
Management indicated that the loan-to-deposit ratio is expected to remain in the range of 90–96% in FY26 and gradually move toward around 85–90% in FY27. The CEO highlighted that the focus should be on the overall trajectory rather than quarterly fluctuations, with improvements expected over the next one to two years.
The bank reported steady growth in Q3 FY26, supported by strong deposit and loan expansion. Deposits grew around 12% YoY, while gross advances increased nearly 12% to ₹3.02 trillion. Asset quality remained stable with a GNPA ratio of 1.24%. The bank also reported RoA of 1.92% and RoE of 13.9% for the quarter.
HDFC Bank Ltd is one of India’s largest private sector banks, offering a wide range of financial services including retail banking, corporate banking, loans, and digital banking solutions. The bank has a strong nationwide presence with an extensive network of branches, ATMs, and digital platforms.
Written by Abhishek Singh
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