HDFC Bank shares fall over 1% despite strong Q4 results
What's the story
HDFC Bank's shares fell over 1% to ₹790 in early trade today, following the lender's March quarter results. Despite a nearly 9% year-on-year rise in net profit to ₹19,221 crore, investors were left wanting more. The fall was mainly due to slower growth in core banking income and loan growth. Net interest income (NII), the difference between interest earned on loans and paid on deposits, increased by a modest 3% YoY to about ₹33,081 crore.
Growth analysis
Advances grew by 12.1% YoY, deposits by 14.4% YoY
HDFC Bank's advances grew by 12.1% YoY, while deposits outpaced at a growth rate of 14.4%. The bank's board also recommended a final dividend of ₹13 per equity share for the year ending March 31, 2026. Despite these figures, some investors were hoping for stronger loan expansion after the HDFC merger integration.
Future outlook
Future earnings may hinge on efficiency improvements
Brokerage firm Equirus said HDFC Bank has moved "from constraint to comfort," indicating earlier balance-sheet pressures are easing. However, it also noted future earnings may depend more on improving efficiency than rapid balance-sheet growth. In its management commentary, HDFC Bank didn't repeat its earlier view of growing loans faster than the industry in FY27 but instead emphasized lending opportunities based on risk and returns.
Market response
Most brokerages remain bullish on HDFC Bank's stock
Despite the mixed results, most brokerages have remained positive on HDFC Bank's stock. Motilal Oswal maintained a "Buy" rating with a target price of ₹1,100 per share, citing business growth is gaining momentum. Equirus kept a "Long" rating with a target price of ₹1,160 while JM Financial maintained an "Add" rating with a target price of ₹890 per share.