Street positive on HDFC Bank results, CLSA has a 'Hold', HSBC lowers target but keeps 'Buy' call

The net interest margin, which reflects the bank's profitability from lending versus its borrowing costs, was unchanged year-on-year at 4.3 percent in Q3 FY25, as there was no significant rise in funding costs.

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26 Aug, 2025 12:21

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CLSA has issued a 'Hold' call on HDFC Bank with a target price of Rs 1,785 per share, adding that Q3FY25 was characterized by steady deposit growth.

However, there has been a curtailment in loan growth, said CLSA, adding the net interest margin (NIM) and asset quality have remained largely stable. CLSA expects the loan-to-deposit ratio (LDR) of the bank to reach 90% only by FY27, which the bank has brought down to 98% in Q3FY25. On a year-on-year basis, the gross slippages were 20 basis points higher, reflecting an overall decent performance by the bank.

This steady growth in HDFC Bank's core earnings - both NII and net profit - came in despite a rise in NPAs and NPA ratios.

Macquarie has issued an 'Outperform' call on HDFC Bank with a target price of Rs 2,300 per share, calling the Q3FY25 performance decent, despite a challenging macroeconomic environment. There was a marginal increase in credit costs due to higher agricultural slippages, however, the bank remains optimistic, expecting net interest margins (NIM) to improve as the macroeconomic conditions become favourable.

HSBC has a 'Buy' on HDFC Bank but with a reduced target price of Rs 1,980 per share as against Rs 2,130 previously. The results were in line with a stable asset quality, but the house has cut its FY26-27 EPS estimates by 4-5% to account for lower loan growth.

Bernstein has an 'Outperform' rating on HDFC Bank with a target price of Rs 2,300 per share, stating that the lender has delivered a solid performance despite muted EPS growth. Net interest income (NII) growth was decent, while net operating income (NOI) growth was weak; however, the core fee income remained strong, said Bernstein.

A year-on-year profit before tax growth of 12% has increased confidence in the bank, said Bernstein, which they believe could return to a mid-teens EPS growth trajectory in the coming quarters.

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