HDFC Bank gains 2% on Q1 business update; brokerages decode fine print

HDFC Bank's business momentum remained steady, with sequential advances and deposits continuing to register healthy growth, said ICICI Securities in a note.

HDFC Bank share price movement

 

Share price of HDFC Bank rose 2 per cent to ₹819.6 on the National Stock Exchange (NSE) in Monday’s intra-day trade after the private sector lender reported a steady business growth in the first quarter (April to June) of the financial year 2026-27 (Q1FY27).

 

In the past month, the stock price of the India's largest private sector lender outperformed the market by gaining nearly 10 per cent, as compared to 4 per cent rise in the Nifty 50. However, thus far in the calendar year 2026, HDFC Bank underperformed the market by falling 17.5 per cent, as against 6.8 per cent decline in the benchmark index.

 

 

HDFC Bank’s Q1 business update

 

HDFC Bank reported a 15.4 per cent year-on-year (YoY) increase in gross advances and a 14.7 per cent rise in deposits at the end of the June quarter (Q1FY27), according to its provisional business update.

 

The bank's period-end gross advances stood at approximately ₹30.61 trillion as of June 30, 2026, compared with ₹26.53 trillion a year earlier. On a sequential basis, gross advances increased 3.4 per cent at the end of March 2026.

 

Advances under management (AUM), which include inter-bank participation certificates, bills rediscounted, and securitisation/assignment, rose 12.4 per cent YoY to ₹31.27 trillion from ₹27.82 trillion a year earlier. Sequentially, AUM increased 2.3 per cent from ₹30.57 trillion at the end of March.

 

Average AUM during the quarter stood at ₹30.39 trillion, up 10.8 per cent from ₹27.42 trillion in the corresponding quarter last year. Compared with the March quarter, average AUM increased 2.5 per cent from ₹29.64 trillion.

 

On the liabilities side, period-end deposits rose 14.7 per cent YoY to ₹31.71 trillion as of June 30, 2026, from ₹27.64 trillion a year earlier. Sequentially, deposits increased 2.1 per cent from ₹31.05 trillion at the end of March.

 

Current Account and Savings Account (CASA) deposits (period end) increased to ₹10.26 trillion, up 9.4 per cent YoY (-3.3 per cent QoQ), while time deposits grew to ₹21.45 trillion, up 17.4 per cent YoY (4.9 per cent QoQ).

 

Brokerages view on HDFC Bank

 

HDFC Bank is a leading private sector bank with consistent growth and operational performance over various cycles. Post merger with HDFC, the bank became the second largest in terms of size with diversified portfolio.

 

HDFC Bank’s business momentum remained steady, with sequential advances and deposits continuing to register a healthy growth. While CASA moderated sequentially, the overall funding profile remains comfortable and does not alter the bank’s structural growth outlook, ICICI Securities said in a note.

 

HDFC Bank reported robust loan growth, marginally ahead of estimates, while deposit growth was in line. Consequently, the credit-deposit (CD) ratio inched up to 95.8 per cent (vs. 94.6 per cent in Q4FY26), analysts at Motilal Oswal Financial Services said. The brokerage firm expects margins to contract slightly this quarter and, in its recent preview note, estimated a 2bp QoQ margin contraction.

 

While near-term Net Interest Margins (NIMs) may remain range-bound due to elevated term deposit share (66 per cent of total deposits), management is focused on RoA-led profitability (1.9 per cent), supported by stable asset quality, benign credit costs (21 bps vs 41 bps QoQ) and improving operating efficiency. Strong provisioning buffer (125 bps), controlled opex growth and benefits from past investments in technology and distribution are expected to drive operating leverage and sustain return ratios over medium term, analysts at ICICI Securities said in the Q4 result update.

 

Healthy credit trends, improving funding profile and well-capitalised balance sheet provides visibility for calibrated growth going into FY27E. Factoring Return on Assets (RoA) of 1.8-1.9 per cent in FY27-28E and sustained growth outlook, the brokerage firm value the bank at 2.1x FY28E ABV and add ₹120 for subsidiaries, assigning a revised target price of ₹1,050 (earlier ₹1,070). Analysts maintain their BUY rating on HDFC Bank.

 

For HDFC Bank, the past two years have been challenging, with transition on both sides of the balance sheets. A valuation re -rating could take time with limited near -term trigger, but analysts at Elara Capital in the Q4 result update said that they also find limited downside here given RoA/RoE potential of 1.8-1.9 per cent/14-15 per cent. Key monitorables hereon will be certain softer aspects.  ===============================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.