HDFC Bank’s share price has come under pressure in 2026, declining around 29% year-to-date (YTD), as investors assess the private lender’s growth momentum, margin performance and leadership transition.
However, domestic brokerage firm Anand Rathi has maintained its ‘Buy’ rating on the stock, with a target price of ₹966 per share, citing reasonable valuations and favourable sector tailwinds.
The brokerage, however, believes there is still a long road ahead for HDFC Bank to catch up with ICICI Bank on key operating metrics, particularly credit growth, net interest margins (NIM) and return on equity (RoE).
HDFC Bank struggles to catch up with peers
According to Anand Rathi, HDFC Bank’s loan growth picked up to 16.4% year-on-year (YoY) in the September quarter of FY27 (Q2FY27). However, excluding the impact of foreign currency non-resident (FCNR-B) deposits, underlying credit growth stood at 14.4%, lagging the industry and private sector banking peers, including ICICI Bank, Axis Bank and Kotak Mahindra Bank.
Corporate and small and medium enterprise (SME) loans led growth, rising 16.4% and 23.5% YoY, respectively. Retail advances grew 12.2%, marking a recovery from six consecutive quarters of single-digit growth, partly supported by FCNR-B-linked self-leveraged loans.
Deposits increased 18.8% YoY, or 14.8% excluding FCNR-B flows. However, current account and savings account (CASA) deposits grew at a slower pace of 10.8%, pulling the CASA ratio down to 31.6%.
Anand Rathi said HDFC Bank has struggled to close the post-merger gap with ICICI Bank across key operating parameters. With CASA growth continuing to trail loan growth, the brokerage expects the bank to take longer to narrow its funding cost gap with ICICI Bank.
Consequently, it does not expect HDFC Bank’s loan growth or RoE to sustainably exceed 15% over the medium term.
HDFC Bank share price target, rating and valuation
Anand Rathi has reiterated its ‘Buy’ rating on HDFC Bank, with a sum-of-the-parts (SOTP)-based target price of ₹966 per share. The brokerage values the bank’s core business at 1.8 times its estimated price-to-adjusted book value (P/ABV) for FY29 and assigns ₹100 per share to its subsidiaries.
According to the brokerage, the stock’s sharp correction has made its valuation reasonable, while favourable sector tailwinds provide support to the investment case. However, the recovery in operating performance may take time, given the challenges in closing the gap with ICICI Bank on credit growth, margins and funding costs.
For investors, the key factors to watch will be the sustainability of loan growth, a recovery in net interest margins, improvement in low-cost deposit mobilisation and the impact of leadership changes on business continuity, according to the brokerage firm.
HDFC Bank share price performance
HDFC Bank’s share price has remained under pressure across multiple timeframes, reflecting sustained weakness in the stock. The shares have declined 1.55% over the past week and 5.39% over the past month.
The stock has fallen 29.41% year-to-date (YTD) and 30.57% over the past year, highlighting the extent of the correction. The weakness has also extended over the longer term, with HDFC Bank shares declining 8.11% over three years and 16.52% over five years.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
