Abhishek Sinha
India’s largest private sector lender HDFC Bank continued its winning streak for the fourth consecutive session, climbing 1.47% to ₹1,009 on Friday. The stock is now just shy of its all-time high of ₹1,018.85, touched in July 2025.
The rally comes just a day before the bank’s Q2FY26 results, scheduled for release on October 18, where analysts expect muted earnings growth but see potential for upside if margins or asset quality surprise positively.
📈 Market Reaction and Context
HDFC Bank’s recent rally has helped lift the Nifty Bank index to a fresh record of 57,830 points, with month-to-date returns exceeding 5.4%. The strength in banking counters has also supported the Nifty 50, which is now within 2% of its lifetime peak.
“Strong quarterly results from HDFC Bank and ICICI Bank could lend fundamental support to markets,” said Dr. V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services. “If Reliance Industries joins the momentum, the bullish trend could extend further, especially with Diwali and Muhurat trading optimism.”
🧾 Q2FY26 Preview: What Brokerages Expect
According to Emkay Global Financial Services, HDFC Bank is likely to report:
- Net Interest Income (NII): ₹31,561 crore (up ~5% YoY, +0.4% QoQ)
- Net Interest Margin (NIM): Around 3.4%, down 22 bps YoY
- Loan Growth: Robust sequential expansion with stable asset quality
- Credit Costs: Expected to remain under control
- Slippages: Likely to decline, particularly in the agriculture loan segment
The brokerage expects loan and earnings CAGR of 11–12% through FY25–FY27, while maintaining stable profitability despite lower margins due to recent RBI rate cuts (100 bps in 2025).
🏦 What Analysts Are Saying
Motilal Oswal expects HDFC Bank’s cost ratios to remain contained and asset quality to stay steady. The brokerage sees the credit-deposit ratio moderating slightly and expects management guidance on credit growth to be the key watchpoint this quarter.
Bonanza Portfolio’s analyst Abhinav Tiwari believes that the stock’s current rally reflects strong fundamentals and steady deposit growth:
“Total deposits have grown 15% YoY and advances 9%, showing a cautious yet consistent expansion. While margin pressure persists in the short term due to repo rate transmission, the bank’s asset quality remains strong.”
He added that Gross NPA (GNPA) and Net NPA (NNPA) are expected at 1.40% and 0.50%, respectively, indicating prudent credit discipline.
💰 Valuation Snapshot
- Trailing P/B Ratio: ~2.9x
- Return on Assets (ROA): 1.93%
- Return on Equity (ROE): ~14%
- Valuation Outlook: Reasonable considering long-term growth potential
Tiwari cautioned that while HDFC Bank remains a solid long-term compounder, investors may consider waiting for Q2 results before initiating new positions.
“The stock is near lifetime highs, and with margin compression and ongoing merger integration, waiting for clarity on Q2 numbers could offer better entry points,” he said.
📊 Investment View: Buy or Wait?
| Parameter | Outlook | Comment |
|---|---|---|
| Earnings Growth (Q2FY26) | Muted | NIM pressure due to rate cuts |
| Asset Quality | Stable | Low slippages; healthy provisioning |
| Valuation | Fair | Trading close to lifetime high |
| Long-Term View | Positive | Strong fundamentals, merger synergies |
| Near-Term Strategy | Wait for Q2 results | Possible volatility post-results |
🪙 Bottom Line
HDFC Bank remains a blue-chip, fundamentally strong stock, supported by a robust balance sheet, consistent profitability, and improving post-merger synergies.
However, with the stock near record levels and Q2 results around the corner, fresh investors may prefer to wait for earnings clarity.
Long-term investors, however, can continue to hold positions as the bank is well-placed to benefit from rising credit growth, stable asset quality, and eventual margin recovery in FY26.
