HDFC Bank Shares Slip in Early Trade as Brokerage Revises Target Price Following FY26 Annual Report

HDFC Bank shares remained in focus on Tuesday, dipping to ₹724.50 on the National Stock Exchange (NSE) from its previous close of ₹729. At 10:28 am, the stock traded at ₹727.30, moving within a day's range of ₹724.50 to ₹728.70. Trading data from the NSE indicated a buy quantity of 9,14,695 against a sell quantity of 15,80,297. Total traded volume stood at 23.65 lakh with a traded value exceeding ₹172 crore. The bank's total market capitalisation stood at ₹11.21 lakh crore, with an adjusted price-to-earnings (P/E) ratio of 14.02. Previously, the stock had hit a 52-week low of ₹715.10 on August 19, 2026, recording absolute returns of 0.62 per cent over a week and a decline of 2.06 per cent over the past month.

The market activity follows an analysis by JM Financial of HDFC Bank's FY26 performance based on its annual report, Basel-III disclosures, and other filings. The brokerage maintained its 'add' rating on the stock while revising its target price downwards to ₹800 from ₹900.

According to the brokerage report, asset quality trends remained stable overall during FY26, with improvements observed across retail and services portfolios. However, agriculture emerged as a key stress pocket, driven by higher delinquencies in animal husbandry and select priority sector lending (PSL) segments. Credit costs in the agriculture portfolio increased, and the rising share of ageing non-performing assets (NPAs) requires ongoing monitoring as the bank transitions to the expected credit loss (ECL) framework.

Balance-sheet risk trends were characterised as mixed. Positive factors included a falling share of top 20 borrowers, reduced borrower and NPA concentration, a sharp decline in stressed asset concentration, stable unsecured loans at approximately 21.5 per cent of advances, and an increase in A-and-above rated corporate exposures. Conversely, key negatives involved higher exposures to commercial real estate and capital market loans, which rose to 7.3 per cent and 2.7 per cent of loans respectively, along with a roughly 29 per cent year-on-year increase in contingent liabilities driven by a jump in forward exchange contracts.

Liabilities and funding remained a key area of focus. The report highlighted a falling retail deposit share, an increased reliance on wholesale funding—such as Certificate of Deposit issuances—and a moderation in the liquidity coverage ratio (LCR) to 114 per cent. While legacy e-HDFC borrowings continued to decline, the bank gained 33 basis points year-on-year in overall deposit market share. Additionally, stronger organic PSL growth reduced the drag from Rural Infrastructure Development Fund (RIDF) balances, though dependence on priority sector lending certificates (PSLC) for small and marginal farmers (SMF) continued.

Non-interest income growth in FY26 was supported by treasury and investment gains, including the HDB Financials stake sale. However, underlying core fee income growth moderated to 9 per cent from 13 per cent in FY25, impacted by a slowdown across payments, third-party products, and investment management.

In related banking developments, reports noted that ICICI Bank tapped the US dollar-denominated bond market for the fourth time in a month under the Reserve Bank of India's discounted window, raising an aggregate of $3.05 billion and overtaking HDFC Bank, which had raised $2.50 billion.

"The recent stock movement and brokerage review of HDFC Bank highlight the complex balancing act large financial institutions face during portfolio transitions. While improvements in retail asset quality and deposit market share are encouraging, the concentration in commercial real estate, reliance on wholesale funding, and rising contingent liabilities require close observation. For institutional and retail investors, navigating the transition to new credit frameworks like ECL will depend heavily on how effectively banks manage sector-specific stress pockets and maintain liability stability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes