HDFC Bank
New, early: highest expected return in our model
- Last close
- ₹722.70
- 29 Sept 2026 · reference
- 1D · 1M
- +0.5% · +0.3%
- price-only
- Weight
- 1.8%
- 31 Jul 2026 · Aug rank 22
- Thesis review
- 8 Sep 2026
- Why We Own, p31
Approved description
India's largest private bank (₹30 lakh crore of loans, 9,700 branches, 100 million+ customers) formed by the 2023 merger with HDFC Ltd, which brought a ₹7 lakh crore mortgage book and a funding gap the bank has spent three years closing. ROA 1.7–1.8%, net NPA 0.4%, CET1 17.4%, PBT-ex-treasury growing 21%; subsidiaries (HDB Financial, HDFC Life, HDFC AMC, HDFC Ergo, HDFC Securities) are worth ~₹110 a share.
- 01The argument has reversed: the house avoided HDFC Bank at 4–5x book and was right; at 1.6x core book with a 16% normalised ROE it is now the highest-expected-return name in our five-bank model (base +29%, probability-weighted +27%, BUY).
- 02Merger digestion is ending: LDR has come down from 110% to 96%, the borrowings share is falling, CASA has stabilised at 32–34%, and every quarter of deposit growth above loan growth lifts NIM (+22 bp by FY29E on our model).
- 03It does not need to 'work' — it needs to keep compounding book at 12–14% and hold ROE near 16%. It is the best-run large bank in India on every measure we track (ROA, NNPA, CET1, PBT-ex-treasury growth).
- 04Largest relative-risk position against the bank index (~20% index weight versus 1.8% for us) — the position is small because we are early, not because the arithmetic is unclear.
- 05We would build toward 4–5% ahead of the CEO succession decision, sized for a binary: being early costs little (1.7% dividend yield, 12% book compounding); being late after a clean succession costs 15–20%.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Total Income | 1,33,110 | 0.0% | +13.8% |
| Interest Earned | 90,575 | +3.7% | +3.9% |
| PPOP | 30,996 | −14.3% | −0.4% |
| Net Profit | 19,245 | +18.4% | −5.4% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Bank preset: NII, PPOP, provisions, NIM, GNPA, CASA, ROA/ROE; P/B. Industrial leverage ratios suppressed.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Approved model
base TP ₹918 (+29%) (price basis 7–8 Sep 2026; internal, not for clients)
What we watch
- CEO succession announcement (the single largest catalyst in our coverage).
- 2QFY27 NIM ≥ 3.30% and deposit growth ahead of loan growth for a fourth consecutive quarter.
- HDB Financial listing value crystallising; any buyback or dividend step-up from surplus CET1.
- CEO succession: the decision is the binary; a messy transition or senior exits would keep the multiple compressed for another year.
- NIM: if deposit repricing lags and NIM stays at 3.3% rather than recovering, FY28E EPS is 6–8% lower than our number.
- Mortgage-heavy book: 30%+ of loans are home loans at thin spreads; growth and margin are structurally lower than the pre-merger bank.