HDFCBANK

Delivers Earnings Beat, Margins Soft

’s Q4FY26 results reinforced its earnings resilience, with net profit rising 9.1% YoY to ₹19,221 crore, aided by lower provisions and costs. While this beat Street estimates, core income growth remained modest, reflecting margin pressures. Shares closed 0.6% higher at ₹800, though the stock is down 17% over the past year. Brokerages largely maintained bullish calls, citing strong asset quality, balance sheet strength, and long-term growth visibility. Financial Performance Net profit: ₹19,221 crore (+9.1% YoY), exceeded estimates by ~4%. Net interest income (NII): up 3.8% YoY, below expectations, highlighting margin and product mix pressure. Asset quality: improved sequentially, with gross and net NPAs declining. Provisions: eased, driving earnings beat. Brokerage Commentary Morgan Stanley: Overweight, TP ₹1,025 (+28% upside). Profit beat driven by lower provisions despite weak core revenue. JPMorgan: Overweight, TP ₹990. Softer NII offset by lower credit costs. CLSA: Outperform, TP ₹1,200 (+50% upside). Loan growth steady, deposit growth improved, LDR reduced to 95% from 99%. Jefferies: Buy, TP ₹1,050. Deposit growth (+14%) supported loan growth (+12%), easing balance sheet constraints. Bernstein: Margins resilient amid post-merger adjustments. Nomura: Strong asset quality supports medium-term outlook; expects RoA ~1.8% and RoE ~14% in FY27–28. Strategic Positioning Margins broadly stable, though flagged as soft by multiple brokerages. Management highlighted continued customer additions and leadership in credit cards, mortgages, and MSME lending. CEO Sashidhar Jagdishan: funding and loan-deposit ratio no longer constraints. Conclusion HDFC Bank’s Q4FY26 earnings underscore resilience from lower credit costs, even as core income growth remains muted. Brokerages remain constructive, expecting NII growth to pick up in FY27–28, supported by easing funding costs and better credit growth.