Motilal Oswal Sees HDFC Bank Targeting Rs 1100
HDFC Bank Reports Strong 4QFY26 Results
HDFC Bank (HDFCB) released its fourth quarter (4QFY26) financial results, which showed a profit of INR192.2 billion. This marks a 9% year-over-year (YoY) growth, in line with expectations. The bank's revenue growth and lower provisions contributed significantly to this increase.
Key Highlights of HDFC Bank's 4QFY26 Results
| Metric | 4QFY26 | 3QFY26 |
|---|---|---|
| Net Interest Income (NII) | INR330.8 billion (3.2% YoY growth) | - |
| Net Interest Margin (NIMs) on total assets | 3.38% (3 basis points QoQ increase) | - |
| Other income | INR132 billion (10% YoY growth, 4% higher than MOFSLe) | - |
| Provisioning expenses | INR26.1 billion (10% lower than MOFSLe) | - |
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The bank's net interest income grew 3.2% YoY to INR330.8 billion, largely in line with expectations. Other income stood at INR132 billion, which is 10% higher than the same period last year. This was driven by better-than-expected treasury gains. Provisioning expenses declined to INR26.1 billion, a 10% decrease compared to the same period last year.
HDFC Bank's advances book grew by a healthy 12.1% YoY and 4% QoQ to INR29.3 trillion. Deposits grew 14.4% YoY and 8.6% QoQ to INR31.1 trillion. The cash deposit (CD) ratio decreased to 94.6%. Fresh slippages reduced to INR62 billion, down from INR86 billion in the previous quarter. As a result, the gross non-performing assets (GNPA) and net non-performing assets (NNPA) ratios improved to 1.15% and 0.38%, respectively. The provision coverage ratio (PCR) remained stable at around 67%.
Outlook and Recommendations
Motilal Oswal Financial Services (MOFS) maintains its earnings estimates for HDFC Bank and expects the bank to deliver FY28E return on assets (RoA) and return on equity (RoE) of 1.9% and 14.9%, respectively. The research firm reiterates its BUY recommendation with a target price of INR1,100. This is based on the bank's ability to deliver strong earnings growth and its attractive valuations, which are currently at 2.3 times the estimated September 2027 adjusted book value plus INR135 for subscriptions.
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Investor Takeaway
Investors should consider buying HDFC Bank with a target price of INR1,100.
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