HDFC Bank Crashes 5% Amid Earnings Hiccups; Jefferies and Nomura Predict Up to 28% Surge

HDFC Bank Crashes 5% Amid Earnings Hiccups; Jefferies and Nomura Predict Up to 28% Surge​

The stock of HDFC Bank saw a significant decline on Monday, trading down over 5% as investors processed Q1 FY27 results. The drop wiped out nearly ₹70,000 crore from the bank's market value. This sell-off occurred despite several international and domestic brokerages maintaining bullish 'Buy' ratings on the stock.

HDFC Bank closed at an intraday low of ₹774.55 per share, with its market capitalization falling below ₹11.93 lakh crore. While the bank saw a 5% year-on-year (YoY) rise in net profit to ₹19,060 crore for the quarter, lingering concerns over interest margins and competitive landscape created volatility in the stock price.

Q1 Financial Performance: Profit Rises Amid Margin Pressure​

The private lender reported several key metrics from the April-June quarter of FY27. Net interest income (NII), calculated as the difference between interest earned and expenses, grew by 7% YoY to ₹33,534 crore from ₹31,438 crore in Q1 FY26.

Gross non-performing assets (NPA) saw a positive reduction of more than 3% YoY, standing at ₹35,846 crore. However, the net NPA experienced a slight increase during the quarter under review. Despite these figures, Net Interest Margin (NIM) contracted by 12 basis points QoQ to 3.26%, which was noted as a key disappointment across analyst firms.

Global Brokerages Project Massive Upside Potential​

The divergence in expert opinion is striking, with some international banks forecasting substantial rallies. Jefferies maintained its 'Buy' call, setting a target price of ₹1,050 per share. This implies an upside potential of over 28% from the stock’s previous closing price of ₹819.6 apiece.

Nomura also holds a ‘Buy’ rating, targeting ₹950 per share and projecting nearly 16% upside. Both international brokerages noted that the Q1 performance was largely in-line with estimates, citing lower operating expenses and credit costs as mitigating factors for the slight miss on NII.

Growth Drivers Versus Operational Concerns​

Analyst reports highlighted a dual narrative of strong business activity tempered by competitive pressures. The bank managed to lift loan growth to 16% YoY through its desire to participate in corporate lending.

However, some domestic firms pointed out that credit growth lagged behind peers such as ICICI Bank and Axis Bank. Anand Rathi noted that HDFC Bank has been unable to close the post-merger gap across key operating metrics like NIM and loan growth compared to competitors.

Outlook from Domestic Analysts and Valuations​

Motilal Oswal strongly reiterated its ‘Buy’ rating, setting an ambitious target price of ₹2,050, projecting around 28% upside. The brokerage supported this with the bank reporting a largely in-line quarter backed by healthy business growth and lower provisions.

JM Financial maintained an 'Add' rating, revising the target to ₹900, implying a 10% upside. JM noted that while the liquidity coverage ratio (LCR) of 115% limits immediate acceleration, they remain constructive on the medium-term margin outlook, expecting NIM improvement as high-cost borrowings run off.