HDFC Bank continues to be among the top picks for Jefferies. They have a Buy rating with a price target of Rs 2,400. This implies an upside of 21% from current levels for the HDFC Bank share price. The international brokerage house pointed out that the improvement in growth, stable asset quality and merger synergies for the list of HDFC Group stocks support earnings growth & ROE for the largest private sector bank in India.
Jefferies on HDFC Bank: Stable asset quality
The management reiterated that the bank is on track to meet its guidance on loan growth and grow deposits at a healthy pace of 16%. As per Jefferies, these are the key pillars supporting the positive outlook for HDFC Bank.
Moreover, Jefferies pointed out that “the asset quality continues to be stable, reflecting a focus on better quality retail and SME loans.” They believe that this would support lending appetite for the bank and expect “credit growth to improve to 11% in FY26 from 5% YoY in FY25.”
Jefferies on HDFC Bank: Monetising merger synergies
After the merger, HDFC Bank has focused on cross-selling of deposits as well as loan/fee-related products. Jefferies also pointed out that the share of customers with HDFC Bank deposit accounts has risen to 95% from 30% earlier (on incremental loans), along with pre-approvals for credit cards/unsecured loans/consumer durable loans. This, along with the ramp-up of branches opened in the past three years, is expected to support the deposit & revenue pool.
Jefferies on HDFC Bank: Improvement in funding mix
Another key factor supporting Jefferies’ positive recommendation is the expected “improvement in funding mix.” They believe that this offers the bank scope to focus on Casa deposits. As a result, these “should help lower funding costs and aid margin improvement from FY27.”
Jefferies on HDFC Bank: Tariff outcome not a big worry
Tariffs continue to be the big macro headwind for the industry, though. Jefferies believes that “uncertainty around tariffs is a key factor to watch for the overall list of bank sector stocks along with HDFC Bank. The economic growth has also slowed in recent times. They expect to see some pick-up in the festive season demand, and this will “be a key determinant”. However, the bank isn’t worried, “as its exposures in SME/export-orientated sectors are to better-rated customers,” explained Jefferies.
Jefferies on HDFC Bank: Lower attrition rate
Last but not least, Jefferies added that the fal in attrition rate is also a key positive for HDFC Bank. The Bank’s management highlighted that “the attrition rate has fallen from 34% in FY23 to 27% in FY24 and 23% in FY25.” While attrition in senior levels has risen slightly and some senior staff are set to retire in coming years, Jefferies says that the bank’s second line of command in “most departments will enable a smoother transition”.