HDFC Bank Rises 3% on Strong Q4 Update; Brokerages Stay Bullish

Shares of HDFC Bank Ltd. rallied by over 3 percent intraday on April 4, outperforming a broader market weighed down by global trade tensions, as investors cheered the lender’s robust operational performance in Q4 FY25. With the stock trading at Rs 1,830.5 per share, HDFC Bank emerged as a notable gainer among financials, supported by healthy loan and deposit growth, along with strong commentary from leading brokerages.

The bank’s business update for the January–March 2025 quarter, filed with the exchanges, showed that both advances and deposits grew at a solid pace, with particular strength in commercial and rural banking, despite some drag in corporate lending.

Q4 FY25 Business Highlights: Deposits and Retail Loans Drive Growth

HDFC Bank’s total advances grew 5.4 percent YoY to Rs 26.4 lakh crore, driven by a 9 percent rise in retail loans and a strong 12.8 percent jump in commercial and rural banking credit. This was tempered by a 3.6 percent decline in corporate loans, which has raised some concerns over large-ticket institutional demand in the current macro environment.

On the liabilities side, total deposits surged 15.8 percent YoY to Rs 25.3 lakh crore, beating several brokerage estimates. The bank’s CASA (current account and savings account) deposits rose by 5.7 percent YoY to Rs 8.3 lakh crore, with the CASA ratio improving to 34.8 percent, reflecting stable low-cost funding.

Sequentially, gross advances rose 4 percent and deposits climbed 5.9 percent, indicating robust momentum despite global headwinds from US-China tariff escalations and tightening financial conditions.

Highlights:

• Advances: Rs 26.4 lakh crore, up 5.4% YoY, 4% QoQ

• Deposits: Rs 25.3 lakh crore, up 15.8% YoY, 5.9% QoQ

• CASA deposits: Rs 8.3 lakh crore, up 5.7% YoY; CASA ratio at 34.8%

• Retail loan growth: 9% YoY

• Commercial & rural loan growth: 12.8% YoY

• Corporate loan book: Down 3.6% YoY

Market and Brokerage Reactions: Bullish Sentiment Intact, Focus on Deposit Outperformance

Despite the ongoing volatility in banking and financial services due to global macro risks and interest rate uncertainty, analysts remained optimistic about HDFC Bank’s underlying fundamentals, particularly the strength in deposit mobilization and diversified loan book.

Motilal Oswal Financial Services reaffirmed its Buy rating, citing above-estimate loan growth and strong deposit traction that outpaced the system average. The firm acknowledged the bank’s ability to continue expanding its deposit base even amid rising competition and flagged the CASA growth as an encouraging signal of retail franchise strength.

Meanwhile, InCred Equities maintained its ‘High-Conviction Add’ rating with a target price of Rs 2,150 per share, underscoring HDFC Bank’s resilience in rural and SME segments. While it acknowledged the persistent softness in wholesale credit, InCred said that recovery in that segment would be cyclical and noted no structural deterioration.

Highlights:

• Motilal Oswal: Buy; applauds CASA growth and deposit traction

• InCred Equities: Target of Rs 2,150; optimistic on commercial banking strength

• Analysts expect continued growth from rural and retail lending

• Corporate loan weakness seen as temporary and cyclical

Loan Mix Rebalancing and Margin Support Key for FY26

Looking ahead, the focus will remain on rebalancing the bank’s loan portfolio to offset the underperformance in corporate lending. Analysts expect improved rural credit penetration, steady retail disbursals, and potential uptick in wholesale demand once the interest rate cycle turns more accommodative in H2 FY26.

The loan mix shift towards higher-yielding segments, coupled with improved CASA ratios, is also expected to provide tailwinds to net interest margins (NIMs) going forward. While HDFC Bank continues to trade at a premium valuation, investors appear comfortable with the bank’s consistent operational delivery and long-term visibility, especially in a volatile macro backdrop.

Highlights:

• FY26 strategy: focus on retail and rural loan growth, improve corporate lending

• NIM outlook supported by CASA gains and loan mix realignment

• Margin improvement and deposit cost management to be key metrics

• HDFC Bank remains a core holding for long-term institutional investors