Shares of HDFC Bank slid 2.1% to ₹713 on the NSE, trailing a 10‑basis‑point drop in net interest margin that placed the lender at the lower end of the market’s earnings spectrum.
The 10‑bps contraction is the smallest contraction reported among the three major banks, with Axis Bank’s NIM shrinking by a steep 37 bps and ICICI Bank falling somewhere in between. Analysts note that the pressure is largely driven by a modest uptick in provisioning costs and a slower loan‑to‑deposit growth.
Kotak Institutional Equities, holding a buy rating, set a price target of ₹1,050, while Bernstein placed its target at ₹1,150. Goldman Sachs and JPMorgan, both bullish, pegged HDFC at ₹970 and ₹861 respectively. The consensus price‑target range implies a 35% upside from the current level.
When juxtaposed with ICICI Bank’s 27% upside target range (₹1,800–₹2,025) and Axis Bank’s 28% upside (₹1,600–₹1,670), HDFC emerges as the frontrunner in valuation potential. It also enjoys a more favourable operating environment, with fee‑income expected to rebound as the RBI’s policy stance tightens.
HDFC’s management will release Q4 guidance on July 12, with analysts anticipating a modest rebound in margins as interest rate sensitivity improves. The bank’s board is also reviewing capital allocation strategies to potentially support share buy‑backs, which could further enhance shareholder value.