Stock Spotlight: HDFC Bank Limited (NYSE:HDB)

About HDFC Bank Limited

HDFC Bank Limited provides banking and financial products and services to individuals and businesses in India, Bahrain, Hong Kong, Singapore, and Dubai. The company operates through Treasury, Retail Banking, Wholesale Banking, Other Banking Business, Insurance Business, and Other segments. It offers savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, mutual funds, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment, commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, forex, and kisan gold cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; and insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, custodial, and documents collection services; online, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services; and financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.

Source: EODHD

Key Stats

Source: EODHD. Data as of 26/06/26.

Growth Potential

• HDB is trading on the cheapest forward price to book (PB) (1.9x) and PE-multiple ratio (14.1x) in 8 years – even below Covid lows.
• Fading merger headwinds (post-HDFC merger NIM dilution driven by a high-cost wholesale borrowing book inherited from the housing finance entity has been a drag on sentiment since 2023) with management confirming that a continued reduction in borrowings would positively impact NIM (cost of funds fell -50bps vs 3Q24 to 4.4% in 4Q26 as the bank actively reduced its borrowings book), with the bank prioritising ROA stability over headline NIM while any positive development in current geopolitical tensions could see RBI resume rate cut cycle, transmitting into lower deposit costs.
• Positive demographic trends with long term positive view on the sector given increase in working population, growing disposable income and positive changes to the regulatory environment.
• Strong brand with strong national network (5,314 banking outlets across 2748 cities) with a customer base of over 49m. Market leader in credit cards (13.3m) and a leading provider of payment gateway services, leading to high quality non-fund revenues. Strong deposit base with CASA deposits (low cost deposits) comprising 39.3% of total deposits.
• Focus on digitalization to improve efficiency and reduce cost to income ratio.
• Material improvement in deposit quality with the share of deposits under INR 3 crore rising +1600bps y/y to 47% in FY26 (smaller, less volatile and more sustainable deposits that improve the quality of the liability portfolio).
  

Key Risks

• India is not without concerns, especially around volatility and risk (such as India’s trade deficit and being a net oil importer, adverse movements in oil prices and in the U.S dollar are potential risks).
• Intensifying competition and weak economy leading to decline in loan growth.
• Cyber security threats given high volume of transactions through internet and mobile (92% of total transactions).
• Political and regulatory changes affecting the banking legislation.
• Funding pressures for deposits and wholesale funding.