HDFC Bank's stock has slid 44% since Sashidhar Jagdishan took the helm on Oct. 27, 2020, a sharp reversal of the 38% rally that followed the July 1, 2023 merger with HDFC Limited. At the same time, the bank’s net interest margin has collapsed to 3.16%, its lowest point on record, underscoring the pricing pressure that comes with an expanded loan book.
Profit, advances and deposits have all surged under Jagdishan, growing 2.6×, 3.1× and 2.7× respectively. Yet the gains have not translated into shareholder value, as the stock’s decline eclipses the underlying business growth. According to the bank’s latest filing, the credit‑deposit ratio peaked near 110% post‑merger, remaining well above the level seen when the CEO first took charge.
The ratio highlights a funding gap: advances outstrip deposits by a wide margin, forcing the bank to seek higher‑cost funding. Compounding the issue is a shrinking share of low‑cost CASA deposits, which erodes profitability when interest spreads tighten. The decline in CASA share has added pressure on the already thin margin.
Anup Bagchi steps in as the first external CEO from ICICI Group, tasked with turning the enlarged balance sheet into tangible returns. His immediate priority will be to bring the credit‑deposit ratio back in line and to stimulate deposit growth that matches the pace of lending. The challenge is steep; Bagchi must also restore investor confidence that the merger’s scale is not merely a balance‑sheet headline but a source of sustainable earnings.
Looking ahead, the market will watch Bagchi’s February earnings for early signs of margin recovery and deposit‑mobilisation strategy. The bank’s board is expected to announce guidance in the next quarterly report, setting the tone for the rest of the fiscal year. Investors will be particularly alert to any shift in the bank’s pricing policy or capital allocation that could lift the 3.16% margin figure.