HDFC Bank Share Price Target 2025: 15.5% Move? Buy, Sell or Hold?

Mirae Asset Sharekhan has issued a 'BUY' recommendation for HDFC Bank, citing a current market price (CMP) of Rs 1,798 and a price target (PT) of Rs 2,100. This indicates a potential upside of approximately 15.5%.

The brokerage report underlines HDFC Bank's focus on retail deposit mobilization and calibrated loan growth, setting a strong foundation for the future.

"We maintain our BUY rating on the stock with a revised PT of ₹2,100, given better visibility of key business metrics and valuing the subsidiaries at ₹252 per share," the report said.

Focus on Retail Deposits and CD Ratio
HDFC Bank has been actively working to grow its retail deposit base, which now constitutes 84% of total deposits. The bank's retail term deposit strategy has driven a market share increase of 40 basis points, reaching 11.6%.

Despite competitive pressures, HDFC Bank maintains price discipline and adds new customer relationships. Additionally, it aims to reduce its credit-deposit (CD) ratio to 85-87% in the near term, a move designed to position the bank for incremental growth as the credit cycle turns in upcoming quarters.

Loan Growth and Margin Improvement
Loan growth is projected to remain between 8-10% in FY2025, slower than the industry average, as the bank focuses on balance sheet management. However, the report predicts that HDFC Bank will match system-wide loan growth by FY2026 and exceed it by FY2027.

Net Interest Margins (NIMs) are expected to improve by 20-25 basis points over the next two years. "Going forward, improvement in system liquidity along with gradual improvement in asset/liability mix would also pave way for margin improvement. NIMs are expected to improve by 20-25bps over the next two years. However, there could be transient volatility in NIMs due to lower interest rate cycle; but over the period, margins will remain steady," the report noted.

Stable Asset Quality Amid Challenges
HDFC Bank's asset quality remains a strong point. Despite stress in the unsecured retail segment industry-wide, the bank expressed confidence in its portfolio quality, having adopted a cautious approach over the past two years.

"The overall asset-quality outlook is stable," Mirae Asset stated, reinforcing its positive view on the bank's management strategies.

Valuation and Growth Trajectory
HDFC Bank currently trades at 2.3x/2.1x/1.8x its FY2025E/FY2026E/FY2027E core book value estimates. The bank is undergoing a transition phase in FY2025 and FY2026, aiming to regain a robust growth trajectory post-transition.