The HDFC Bank has been down for the second straight session after the country’s largest private bank reported its business update for the third quarter of FY26. However, international brokerage house Jefferies has maintained that HDFC Bank continues to be its top pick in the banking sector and maintained its ‘Buy’ rating on HDFC Bank. The brokerage house has a target price of Rs 1,240, implying over 24% upside potential from the current market price.
Jefferies on HDFC Bank: Deposit growth slower than credit growth
The lender’s loan growth for the December quarter (Q3 FY26) improved to 12% YoY from 10% in the September quarter and is in line with sector growth of 12%. This is slightly higher than Jefferies’ FY26 loan growth estimate of 11%. Deposit growth stood at 11.5%, which is a tad slower than credit growth (it seems LDR isn’t as big an issue), and CASA growth of 10% looks healthy, as per the brokerage.
HDFC Bank’s Q3 FY26 business update
The bank posted almost 12% year-over-year growth in advances to Rs 28.44 lakh crore Q3FY26, while deposits increased 11.5% to Rs 28.59 lakh crore. The bank posted loan growth higher than deposit growth after several quarters.
The bank’s credit-deposit (CD) ratio surged 60 basis points (bps) sequentially in Q3, after a 285 bps increase in Q2. The bank’s CD ratio now stands at 98.5% at the end of Q3FY26.
HDFC Bank share performance
The share price of HDFC Bank has fallen well over 1% in the last five trading sessions. The stock has declined 2.5% in the past one month. However, HDFC Bank’s stock price has given a return of 14.4% in the previous 12 months.
HDFC Bank Q2 FY26 results
HDFC Bank reported a surge of 10.8% year-over-year rise in standalone net profit at Rs 18,641 crore in the second quarter of FY26, rising from Rs 16,820.97 crore posted in the same quarter a year ago. The bank’s Net Interest Income (NII)came in at Rs 31,551.5 crore, rising 4.8% YoY in Q2 FY26, from Rs 30,114 crore.
The lender’s Gross NPA fell 7.42% sequentially to Rs 34,289.48 crore, while Net NPA declined 6.75% QoQ to Rs 11,447.29 crore. Gross NPA ratio dropped 16 bps QoQ to 1.24% and Net NPA ratio fell 5 bps QoQ to 0.42%.