K S Srinivasan 24 October 2026

HDFC Bank Share Price Target at Rs 925: Motilal Oswal Stock Research

Motilal Oswal has reiterated its Buy rating on HDFC Bank with a target price of Rs 925, about 27% above the current market price of Rs 728. The lender's second-quarter net profit rose 5% from a year earlier to Rs 19,510 crore, in line with estimates. Net interest income grew 10% to Rs 34,620 crore, but the net interest margin slipped 10 basis points to 3.16% as costly foreign-currency deposits weighed on returns. Loans grew 16.4% and deposits 18.8%. Bad-loan ratios improved to 1.11% gross and 0.37% net. The brokerage raised its earnings estimates for fiscal 2027 and 2028 by 3.5% each.

BUY REITERATED
2QFY27 Results Update
Private Banking

HDFC Bank clears its quarterly check-up: margins dip, but asset quality reads healthier

Motilal Oswal sees a 27% upside to Rs 925 after an in-line September quarter in which robust loan growth and cleaner books outweighed a temporary squeeze on margins.

DIAGNOSTIC REPORT · NO. 2QFY27/925


Patient
HDFC Bank

Referred by
Motilal Oswal

Report date
Oct. 18, 2026

Current reading
Rs 728

Target reading
Rs 925 (+27%)

Impression
BUY
Not a guarantee of returns. 12-month view.

The levels, as prescribed

Rating	CMP	Target	Upside	52-week range	Market cap
Buy	Rs 728	Rs 925	27%	Rs 682 – 1,021	~Rs 11.2 lakh crore

Valuation basis: 1.8x March 2028 estimated adjusted book value for the bank, plus Rs 124 a share for subsidiaries.

HDFC Bank delivered what Motilal Oswal described as a largely in-line quarter. Business growth was healthy and operating profit beat expectations, though provisions ran higher than forecast. The stock trades at Rs 728, just above its 52-week low of Rs 682 and nearly 29% below its high.

Test results against the reference range

Most readings sat within the brokerage's "reference range," with two flagged. Other income, lifted by fee growth and Rs 800 crore of treasury gains, came in 6% above forecast. Provisions overshot by 11.5%, taking credit cost to 44 basis points.

Test (Rs crore)	Result 2QFY27	MOSL estimate	YoY	Flag
Net interest income	34,620	34,370	+9.7%	In range
Other income	13,830	13,020	-3.6%	H · beat 6.2%
Operating expenses	18,970	18,670	+5.5%	In range
Operating profit	29,480	28,720	+5.6%	H · beat 2.7%
Provisions	3,570	3,200	+2.1%	H · 11.5% over
Net profit	19,510	19,370	+4.7%	In range
Net interest margin	3.16%	3.18%	-11bp	L · marginal

Converted to crore from the house's quarterly table. Cost-to-income ratio eased to 39.1%.

The margin reading, and why it should recover

1QFY26

3.35%

2QFY26

3.27%

3QFY26

3.35%

4QFY26

3.38%

1QFY27

3.26%

2QFY27 · LOW

3.16%

The 10-basis-point slide traces to the bank's special FCNR(B) foreign-currency deposit drive, which mobilised Rs 1.10 lakh crore and was partly leveraged through borrowings. Cost of funds held flat at 4.4% rather than falling, since relief from called AT-1 bonds was offset by that leverage. Management said the margin trajectory should turn upward from the next quarter, with the third quarter getting a partial lift from a rate hike, though the full-quarter cost of FCNR(B) money will blunt it.

Growth, measured in test tubes

Year-on-year growth, 2QFY27 (fill height to scale, 25% = full tube)

24%

SME loans

18.8%

Deposits

16.4%

Total loans

16%

Corporate

10.8%

CASA

9.1%

Retail*

*Retail excludes Rs 54,800 crore of FCNR leverage loans. Lighter fill marks the slower-growing lines.

Advances reached Rs 31.96 lakh crore and deposits Rs 33.27 lakh crore. Because deposits outran CASA, the CASA ratio dipped 72 basis points to 31.6%, and the credit-deposit ratio edged up to 96.0%. Motilal Oswal expects calibrated balance-sheet management to bring that ratio down to about 93% by fiscal 2028.

Clinician's notes from the earnings call

01 · Retail is waking up. Retail disbursements crossed Rs 90,000 crore in the quarter, up from Rs 76,000 crore, spread across personal loans, vehicles, gold and agriculture. New credit cards rose 19% sequentially to 14 lakh.

02 · MSME leads the charge. The bank disbursed Rs 41,000 crore under the ECLGS 5.0 guarantee scheme, the most of any lender.

03 · Liabilities franchise widening. It added 17 lakh liability accounts. Large one-off outflows masked retail deposit growth and held the liquidity coverage ratio at 113%; the long-run comfort zone is 110% to 120%.

04 · Leaner back office. Headcount may stay flat for some time as staff shift to front-line and technology roles.

05 · New hand at the helm. Incoming MD and CEO Anup Bagchi said he will engage stakeholders first, then set out his view on growth, margins, quality and productivity.

Asset quality: the cleanest reading in six quarters

Marker	1QFY26	2QFY26	3QFY26	4QFY26	1QFY27	2QFY27
Gross NPA	1.40%	1.24%	1.24%	1.15%	1.17%	1.11%
Net NPA	0.47%	0.42%	0.42%	0.38%	0.41%	0.37%
Provision coverage	66.9%	66.6%	65.9%	67.2%	65.5%	66.9%
Slippages (Rs crore)	9,020	7,400	8,600	6,200	8,040	6,100

Fresh slippages fell 24% from the previous quarter. Beyond specific provisions, the bank holds Rs 15,600 crore of contingency buffers and Rs 21,400 crore of floating provisions. Agricultural bad loans held steady despite an uneven monsoon. Capital is ample, with a CET1 ratio of 17.1% and total capital adequacy of 18.9%.

Subsidiary specimens

HDB FINANCIAL

Rs 780 cr

PAT +34% YoY · -1% QoQ

HDFC SECURITIES

Rs 270 cr

PAT +29% YoY · -10% QoQ

HDFC LIFE

Rs 510 cr

PAT +13% YoY · -16% QoQ

HDFC AMC

Rs 750 cr

PAT +4% YoY · -11% QoQ

HDFC ERGO

Rs 160 cr

PAT -11% YoY · -27% QoQ

Reported group profit rose 5.8% to Rs 21,980 crore. HDB Financial grew loans 12% to Rs 1.25 lakh crore, while HDFC Securities lifted revenue about 37% to Rs 960 crore.

The dosage: how Rs 925 is measured out

Core bank Rs 801

+124

Full dose: Rs 925 a share

Subsidiaries are valued at Rs 155 a share (HDFC Life 49, HDFC AMC 49, HDB Financial 28, HDFC Securities 20, HDFC Ergo 10), less a 20% holding-company discount of Rs 31, leaving Rs 124.

Motilal Oswal values the standalone bank at 1.8 times its March 2028 estimated adjusted book value of Rs 436. Margin repair from retiring high-cost borrowings, plus operating leverage, should lift returns gradually toward a fiscal 2028 return on assets of 1.74% and return on equity of 14.1%.

Rs crore	FY26	FY27E	FY28E
Net interest income	1,28,690	1,41,960	1,68,450
Operating profit	1,18,560	1,21,510	1,42,750
Net profit	74,670	82,150	92,920
EPS (Rs)	48.5	53.4	60.4
Adjusted BV a share (Rs)	352	388	436
RoA / RoE	1.80% / 14.2%	1.76% / 13.9%	1.74% / 14.1%
P/E, subsidiaries adjusted (x)	12.5	11.3	10.0
P/ABV, subsidiaries adjusted (x)	1.7	1.6	1.4

Net profit estimates for FY27 and FY28 raised 3.5% each, from Rs 79,390 crore and Rs 89,820 crore.

Editor's note

Other income: the report's summary says it fell 4% YoY and rose 8% QoQ, which matches its quarterly table. A later bullet says it "fell 4% QoQ." We have used the table figures.

Valuation basis: 1.8 times the FY28 adjusted book value of Rs 436 works out to about Rs 785. The sum-of-the-parts table assigns Rs 801 to the core bank, implying roughly 1.84 times.

Segment growth: the results summary puts SME growth at 24% and corporate growth at 16%. The call notes cite business banking at 28% and corporate at 16.4%, which matches growth for the whole loan book.

Symptoms to watch

Margin relapse: if FCNR(B) costs linger or rate relief is shallow, the promised margin upturn could be delayed.

Funding strain: a 96% credit-deposit ratio and a slipping CASA share leave little slack.

Fee pressure: management called the cut in insurance commissions "very high," which could weigh on other income.

Transition: the CEO handover adds a period of strategic uncertainty. The report prints no formal risk list, so these points are drawn from its commentary.

Sources

Motilal Oswal Financial Services, HDFC Bank 2QFY27 Results Update, dated Oct. 18, 2026; analysts Nitin Aggarwal, Akshay Badlani and Devansh Jani. Figures converted to crore and lakh crore; the test-tube and syringe graphics use the house's printed figures.

Disclaimer: This TopNews Stock Report is based on a brokerage research report and is for information only. It is not investment advice. Investments in securities markets are subject to market risks; read all related documents carefully and consult a registered adviser before investing.

Levels at a glance: HDFC Bank · Motilal Oswal BUY · CMP Rs 728 · Target Rs 925 · Upside ~27% · 52-week range Rs 682 – 1,021 · Basis 1.8x FY28E ABV + subsidiaries

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