HDFC Bank's market cap only slightly trails Goldman Sachs

HDFC Bank Ltd has seen its market capitalisation soar to Rs 14.69 trillion ($176.28 billion)

HDFC Bank Ltd has seen its market capitalisation soar to Rs 14.69 trillion ($176.28 billion), coming close to Wall Street giant Goldman Sachs’ Rs 14.93 trillion ($179.16 billion), according to data.

HDFC Bank's market cap reached near-parity following a rebound from its 52-week low of Rs 1,426.80 in April 2024, with its share price approaching Rs 2,000 by April 2025.

HDFC Bank’s stock has gained significant momentum, rising approximately 34 percent from its 52-week low, fuelled by a combination of strong quarterly results, strategic balance sheet management, and favourable market sentiment, according to a report by IIFL Finance Limited.

According to another report by Nuvama Wealth and Investment Ltd, a critical factor in the stock rally has been HDFC Bank’s focus on addressing deposit-related pressures stemming from its 2023 merger with Housing Development Finance Corporation (HDFC Ltd.).

The merger significantly increased the bank’s loan portfolio but left it with a relatively smaller deposit base, the report said, pushing the loan-to-deposit ratio (LDR) to 104 percent in March 2024.

Since then, HDFC Bank has prioritised deposit mobilisation, reducing the LDR to 96.5 percent by March 2025.

According to what the CFO Srinivasan Vaidyanathan said during a press call, the bank’s management expects the LDR to return to pre-merger levels of 85-90 percent by FY27.

The bank has capitalised on improved systemic liquidity and lowered interest rates on savings accounts (by 25 basis points for balances below Rs 50 lakh) and fixed deposits to attract cost-effective deposits, according to the analyst report.

This has helped stabilise NIMs, which are projected to reach 3.5-3.6 percent by FY27 as high-cost borrowings are phased out and the loan mix shifts toward higher-yielding retail assets.

Nuvama noted, “HDFC Bank is addressing near-term post-merger headwinds by focusing on deposit mobilization and balance sheet rebalancing,” forecasting deposit growth at a 15 percent CAGR between FY25 and FY27.

On the other hand, unlike HDFC Bank, Goldman Sachs does not rely on a traditional deposit base or retail lending, making the two entities not directly comparable. Yet, the proximity in market cap highlights HDFC Bank’s ability to compete with global financial giants, even as it navigates domestic challenges like deposit pressures and a looming rate-cut cycle.

Moreover, Goldman Sachs recently initiated a 'BUY' rating on HDFC Bank.

It also said the bank has the potential to cross the Rs 2,000 mark in the stock market, driven by easing regulatory norms and improving financial metrics.