
HDFC Bank’s Q3FY25 performance has elicited mixed responses from brokerages, reflecting both optimism about its long-term potential and caution about near-term challenges. While some highlight the bank’s steady fundamentals, others express concerns over loan growth and asset quality. Here’s what the brokerages are saying:
Brokerage Ratings and Target Prices
Brokerage | Rating | Target Price (₹) | Potential Upside/Downside from CMP (₹1,674) |
---|---|---|---|
Bernstein | Outperform | 2,300 | +37% |
CLSA | Hold | 1,785 | +7% |
Investec | Hold | 1,650 | -1% |
Bank of America (BoFA) | Buy | 2,020 | +21% |
Morgan Stanley (MS) | Overweight | 1,975 | +18% |
Macquarie | Outperform | 2,300 | +37% |
HSBC | Buy | 1,980 | +18% |
Motilal Oswal (MOSL) | Buy | 2,050 | +22% |
Nuvama | Buy | 1,950 | +16% |
Detailed Brokerage Insights
Bernstein: Outperform, Target ₹2,300
- Positives: Decent NII growth, strong core fee income, and a 12% YoY growth in profit before tax, providing confidence in future performance.
- Bernstein expects the bank to return to mid-teens EPS growth trajectory in the coming quarters.
CLSA: Hold, Target ₹1,785
- Key Observations: Q3 profit before tax was in line, but loan growth was curtailed to 3% YoY, with the Loan Deposit Ratio (LDR) at 98%.
- CLSA expects the LDR to normalize at 90% only by FY27.
Investec: Hold, Target ₹1,650
- Concerns: Slight miss on NII and seasonal increases in agricultural slippages.
- Investec believes it will take at least two years for HDFC Bank to stabilize its balance sheet.
BoFA: Buy, Target ₹2,020
- Positives: No surprises in Q3, with the LDR nearing normalization in three quarters.
- BoFA highlights early synergies in liability cross-sells and views current valuations at 2x P/B as attractive.
Morgan Stanley: Overweight, Target ₹1,975
- Takeaways: Strong asset quality, steady franchise, and 18% YoY growth in fee income.
- MS expects loan growth to accelerate once the LDR normalizes by H1FY26.
Macquarie: Outperform, Target ₹2,300
- Observations: Decent results in a tough macro environment, though agri slippages led to slightly higher credit costs.
- The bank expects NIM to improve as the macro environment recovers.
HSBC: Buy, Target ₹1,980
- Insights: Q3 results were in line, with stable asset quality and minor NIM compression of 3bps QoQ.
- HSBC has reduced FY26-27 EPS estimates by 4-5% to reflect slower loan growth.
Motilal Oswal: Buy, Target ₹2,050
- Highlights: In-line earnings, with a gradual retirement of high-cost borrowings expected to improve return ratios in FY26.
- MOSL sees RoA/RoE of 1.8%/13.9% for FY26.
Nuvama: Buy, Target ₹1,950
- Positives: Better-than-expected slippage metrics, improved LDR, and strong deposit market share gains.
- Agri slippages grew 13% QoQ, but the total lagged slippage ratio at 1.4% remains the lowest among private peers.
Conclusion: Bullish Sentiment Dominates
While concerns over asset quality, loan growth, and seasonal slippages exist, most brokerages remain optimistic about HDFC Bank’s long-term prospects. Target prices range from ₹1,650 (Investec) to ₹2,300 (Bernstein and Macquarie), offering upside potential of up to 37% from the current market price of ₹1,674.
HDFC Bank’s leadership in the private banking sector, coupled with improving NIMs and fee income growth, makes it a solid pick for investors with a medium-to-long-term outlook.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.