HSBC Cuts Target Prices for HDFC Bank, SBI and Others as Iran Conflict Threatens Q4 Earnings

HSBC Cuts Target Prices for HDFC Bank, SBI and Others as Iran Conflict Threatens Q4 Earnings​

Asset-Side Risks Emerge for Indian Banks Ahead of March Quarter​

HSBC has lowered its target prices across major Indian banks and non-banking financial companies, warning that the ongoing Iran conflict could significantly weaken March quarter earnings for the broader BFSI sector.

In its latest note, the brokerage highlighted that risks are no longer limited to funding pressures on the liability side. It now sees growing stress on the asset side, indicating a broader impact on lenders’ balance sheets.

The firm cautioned that continued geopolitical instability could weigh on credit demand, slow growth momentum, and compress margins in the coming quarters.

Private Banks Preferred Despite Broad Target Cuts​

While issuing widespread downgrades to valuation targets, HSBC maintained a clear preference for private sector banks over public sector lenders and NBFCs.

Among key revisions:

• HDFC Bank target cut to Rs 840 from Rs 990
• ICICI Bank reduced to Rs 1470 from Rs 1630
• Axis Bank lowered to Rs 1420 from Rs 1580
• IndusInd Bank revised to Rs 880 from Rs 1110
• Kotak Mahindra Bank trimmed to Rs 420 from Rs 490

PSU Banks Also See Downward Revisions​

State-run lenders were not spared in the reassessment, with HSBC cutting targets amid the same macro pressures:

• State Bank of India (SBI) target reduced to Rs 1120 from Rs 1250
• Bank of Baroda lowered to Rs 275 from Rs 340

NBFC Segment Faces Sharper Cuts​

The impact was more pronounced in the NBFC space, where HSBC made steeper downward revisions across several names:

• Bajaj Finance cut to Rs 920 from Rs 1110
• Bajaj Housing reduced to Rs 67 from Rs 80
• Chola Finance lowered to Rs 1790
• Shriram Finance trimmed to Rs 1050
• L&T Finance reduced to Rs 280
• M&M Finance cut to Rs 300
• IIFL Finance lowered to Rs 510

In the microfinance and cards segment:

• CreditAccess Grameen target set at Rs 1300
• SBI Card reduced to Rs 560

Small finance banks also saw revisions, with:

• Equitas and Ujjivan both cut to Rs 67

LIC Housing Seen as Defensive Pick​

Despite the broad-based cuts, HSBC identified LIC Housing Finance as a relatively defensive play. The brokerage noted its valuation discount, even as it trimmed the target price to Rs 590 from Rs 610.

Outlook Remains Cautious Despite Buy Ratings​

HSBC continues to maintain Buy ratings on most large-cap lenders. However, the sharp reductions in target prices reflect a more cautious outlook as geopolitical tensions begin to influence sector fundamentals.

With earnings season approaching, the brokerage’s stance signals heightened vigilance for investors tracking the performance of India’s banking and financial sector.