HDFC Bank stock outlook: Brokerages bullish after Q3 profit beat, flag deposit growth as key monitor

HDFC Bank

• HDFC Bank Q3 FY26 net profit rose 11.5% YoY to Rs 18,650 crore
• Brokerages remain bullish but flag deposit growth as a key concern
• Net interest margins and asset quality improved; stock outperformed Nifty 50

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Brokerages largely retained their bullish stance on HDFC Bank stock after its Q3 FY26 results, citing a modest earnings beat, improving margins and controlled costs, while continuing to flag deposit growth as the key near-term concern for the lender.

Over the weekend, HDFC Bank reported an 11.5 percent year-on-year rise in standalone net profit to Rs 18,650 crore in Q3 FY26, aided by steady core earnings, margin expansion and lower credit costs. Net interest income grew 6.4 percent, while asset quality remained stable, with gross NPAs unchanged sequentially at 1.24 percent.

Ahead of the quarterly results, HDFC Bank shares had risen 0.55 percent on Friday to end at Rs 930.55 on the NSE. The stock has gained 13.7 percent in the last one year, outperforming benchmark Nifty 50, which has returned less than 11 percent during the same period.

HDFC Bank stock call: Brokerages say 'buy'

Brokerages stayed constructive on the stock even as they flagged moderating deposit growth and the need for stronger mobilisation to support a re-rating.

CLSA reiterated its Outperform rating on HDFC Bank stock with a target price of Rs 1,200 per share, implying an upside of about 29 percent. The brokerage noted that the bank’s Q3 FY26 profit before tax was 5 percent ahead of estimates, aided by in-line pre-provision operating profit and lower-than-expected credit costs. Core operating profit came in 2 percent above expectations, driven by better net interest margins and cost control. CLSA highlighted an 8 basis point sequential expansion in margins, supported by lower deposit costs and the benefit of the CRR cut, even as loan growth at 2.7 percent quarter-on-quarter lagged its estimate. Deposit growth moderated to 12 percent year-on-year due to curtailment of wholesale deposits, though average CASA growth improved during the quarter.

• Also read | ICICI Bank stock outlook: Brokerages largely positive even after Q3 profit miss; CEO extension a key relief

Bernstein also maintained an Outperform rating with a Rs 1,200 target, pointing to consistent earnings delivery. The brokerage noted that Q3 earnings per share growth improved to 11 percent year-on-year from 10 percent in the previous quarter, supported by steady net interest income, marginal increase in the loan-to-deposit ratio, release of provision buffers, cost discipline and healthy fee income. Return on assets remained stable, it said.

Jefferies reiterated its Buy call and raised a slightly higher target price of Rs 1,240 per share, after the bank reported profit ahead of estimates. While core profit was largely in line after adjusting for provision releases and one-offs, Jefferies said deposit growth of around 12 percent remains a concern. The brokerage noted management’s clarification that the bank exited costlier deposits to improve margins, adding that a pickup in deposit growth would be critical for reducing the loan-to-deposit ratio and supporting a re-rating of the stock. Asset quality remained stable, it added.

Kotak Institutional Equities maintained an Add rating with a target price of Rs 1,050 per share, highlighting a 12 percent year-on-year growth in Q3 FY26 earnings. Operating profit rose 8 percent, while provisions declined 10 percent year-on-year. Loan growth stood at 12 percent, and net interest margins improved 10 basis points sequentially to 3.3 percent. Kotak said the bank’s guidance for above-industry growth in FY27 reflects the need for stronger deposit mobilisation going ahead.

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