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HDFC Bank (Target - ₹ 1,050, Buy) - “RoA to sustain going into FY27E, valuation warrants upside”

ICICIdirect Research 24 Apr 2026 DISCLAIMER

HDFC Bank delivered mixed performance in Q4FY26. While deposits accretion remained strong at 14.4% YoY (8.6% QoQ), supported by a healthy 10.3% QoQ uptick in CASA, credit growth was slightly below expectations, at ~12% YoY (vs management guidance of in-line industry growth which was at ~13.5%).
While advance grew 12% YoY, NII growth remained at 3.2% YoY owing to decline in repo rate and lagged transmission. NIM improved 3 bps QoQ to 3.38%. Control on opex (13.5% QoQ decline in staff cost) and benign credit cost (-8% QoQ), resulted in PAT growth of 9.1% YoY (3% QoQ) to ₹19,221 crore. Asset quality remained stable, with GNPA/NNPA at 1.15%/0.38% (vs 1.24%/0.42% Q3FY26), with management reiterating no emerging stress pockets across segments.
Strategy to focus on RoA trajectory (expect at 1.8-1.9% in FY27-28E) driven by controlled opex, steady margins and benign credit cost continue. Thus, we maintain Buy rating on the stock with target at ₹1,050, valuing standalone bank at ~2.1x FY28E BV. Ambiguity related to appointment of Chairman and extension of current MD & CEO remains a risk.

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