Shares of private sector lender HDFC Bank are currently trading near their 52-week low. The banking stock hit Rs 726.75 on April 2 this year and has since hovered close to that mark, signaling persistent bearish sentiment among investors.
On May 12, HDFC Bank shares closed 1.77% lower at Rs 751.05, with the bank's market capitalization sliding to Rs 11.56 lakh crore.
Factors Behind the Decline
A significant trigger for the stock's correction was the resignation of the bank's Chairman, Atanu Chakraborty, on March 18. This abrupt exit, occurring just before the release of Q4 earnings, fueled concerns about potential internal governance issues, leading to a 13.81% crash in the share price.
Despite HDFC Bank reporting a decent set of Q4 FY26 earnings, investor interest remained subdued. The broader market was also impacted by the escalating West Asia crisis, rising oil prices, and Middle East tensions, which put severe selling pressure on indices and affected the entire Indian banking sector.
Brokerage Outlook and Recommendations
Several brokerages have offered their perspectives on HDFC Bank shares:
- Nuvama: Trimmed its target price to Rs 1050 from Rs 1170, citing the sharp fall and limited visibility for near-term rerating.
- MOFSL (Motilal Oswal Financial Services): Reiterated a 'BUY' call with a target price of Rs 1,100. MOFSL noted an in-line quarter for HDFC Bank, characterized by healthy business growth, net interest margin (NIM) expansion, and robust asset quality. Loan growth was driven by corporate and SME segments, with retail loan growth remaining modest.
- Systematix: Maintained a 'Buy' rating with an unchanged target price of Rs 960. The brokerage values the standalone bank at 1.9 times its estimated FY28 adjusted book value per share of Rs 438, projecting a return on equity (RoE) of 14% for FY27E.
- Nirmal Bang Institutional Equities: Assigned a price target of Rs 1,069, expressing long-term positive sentiment due to HDFC Bank's strong asset quality, growth potential from a solid capital position, and anticipated margin improvement and merger synergies.
Q4 FY26 Financial Performance
For the fourth quarter of FY26, HDFC Bank reported a 9.1% year-on-year (YoY) rise in its standalone net profit. The bank's bottom line reached Rs 19,221.05 crore, up from Rs 17,616.14 crore in the corresponding period last year.
The lender also maintained substantial contingency and floating provisions, standing at Rs 15,700 crore and Rs 21,400 crore, respectively, indicating a cautious approach to risk management.
Disclaimer: This article provides general market information and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.