Jefferies has maintained its buy rating on HDFC Bank, with a target price of ₹1,240 per share, after the bank delivered a better-than-expected profit performance in Q3FY26.
The brokerage noted that net profit rose 11% year-on-year to ₹187 billion, beating estimates. Core profit, adjusted for provision releases, agricultural PSL provisions and the impact of the new labour law, was broadly in line with expectations, indicating stable underlying trends.
Jefferies highlighted that deposit growth of 12% year-on-year remained a concern, particularly given the bank’s scale. Management clarified that it had deliberately allowed higher-cost deposits to run off in order to improve margins. According to the bank, deposit growth could pick up in coming quarters, which would help ease the loan-to-deposit ratio and support future growth.
Asset quality remained stable during the quarter, providing comfort on downside risks. However, Jefferies stressed that sustained improvement in deposit growth will be critical for a valuation re-rating, even as margins and profitability remain resilient.
Overall, Jefferies believes HDFC Bank remains well positioned, but sees funding traction as the key monitorable going forward.
Disclaimer: The views and recommendations above are those of Jefferies. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
