HDFC Bank rating upgrade: Anand Rathi target ₹967

What changed in the latest HDFC Bank call

Anand Rathi upgraded HDFC Bank to BUY, arguing that the recent stock correction has improved the stock’s risk-reward. The brokerage set a Sum of the Parts (SOTP) based target price of ₹967, valuing the core bank at 2x FY28E P/ABV and assigning ₹125 per share to subsidiaries. The upgrade came after the bank’s fourth-quarter results showed a set of operating improvements versus the previous quarter. Even with the upgrade, the brokerage said it continues to prefer ICICI Bank.

Q4 performance markers that stood out

The most visible positive was deposit momentum. Deposit growth rose to 14.4% year-on-year, accelerating from 11.6% in the previous quarter. This matters because deposit traction has been a key focus area for HDFC Bank after system liquidity tightened and the loan book remained large.

The bank also reported a 406 basis points quarter-on-quarter improvement in the loan-to-deposit ratio (LDR). In parallel, net interest margins (NIMs) expanded 3 basis points quarter-on-quarter. Asset quality metrics, as described in the note, improved versus both the prior quarter and a year ago.

Key operating metrics mentioned

Why Anand Rathi still prefers ICICI Bank

Despite the “positive report card”, Anand Rathi flagged that HDFC Bank’s loan growth trails industry peers. The brokerage also pointed out that management does not expect a meaningful acceleration in loan growth. That stance matters because a faster growth phase typically drives incremental earnings, but it can also strain funding.

The note also cautioned that if HDFC Bank pushes hard to accelerate loan growth, it could face margin compression. The stated reason was the combination of a large balance sheet and tight system liquidity, which can raise marginal funding costs and limit the ability to expand spreads.

How the ₹967 target price was derived

Anand Rathi’s ₹967 target price is based on an SOTP approach. It values the core bank at 2x FY28E P/ABV, then adds ₹125 per share for subsidiaries. The brokerage framed the upgrade as driven less by a dramatic change in long-term positioning and more by the stock price drop improving risk-reward.

Other broker targets show a wide range

The article data also lists multiple target prices from other firms, reflecting differing assumptions on growth, margins, and subsidiary value. ICICI Securities (I-Sec) maintained a BUY with a revised target of ₹2,200 (from ₹2,100), valuing the core book at ~2.4x FY27E ABV and assigning ₹279 for subsidiaries. In a separate results-linked roundup, Jefferies maintained Buy and raised its target to ₹2,340 (from ₹2,120), while CLSA retained Buy and revised its target to ₹2,200 (from ₹1,785).

Nuvama Institutional Equities reiterated Buy with a revised target of ₹2,195 (from ₹1,950) after highlighting asset quality improvement, deposit market share gains, improved LDR, and an uptick in core NIM. Macquarie suggested Outperform and raised its target to ₹2,300. IIFL Securities suggested ₹2,160 based on 2.45x core FY27 P/BV, citing average FY26-28E ROA/ROE of 1.8%/14%.

Selected targets and valuation anchors cited

Market pricing references in the data

One note cited HDFC Bank’s current market price as ₹1,964.85 and a market capitalisation of ₹15,03,278.95 crore, with the bank incorporated in 1994. Separately, S&P Global Market Intelligence data in the text showed an average target price of ₹2,271.49 and a current price of ₹2,007.4, implying an upside of 13.31%, based on 41 analysts.

For the ADR listing (HDB), short-term targets from four analysts were shown at an average of $10.04, with a range of $10 to $18, versus a last closing price of $16.54.

What investors may track from here

The key operating thread in the write-up is the link between deposit growth, liquidity conditions, and margins. The Q4 data points cited show momentum on deposits, LDR, and NIMs, but the brokerage caution focuses on how sustainably the bank can grow loans without sacrificing profitability. Another risk explicitly flagged is slower-than-expected deposit growth, which ICICI Securities said could impact loan growth.

Conclusion

Anand Rathi’s upgrade frames HDFC Bank as a better risk-reward proposition after the correction, supported by Q4 improvements in deposits, LDR, NIMs, and asset quality. At the same time, the note keeps attention on loan growth relative to peers and the possibility of margin pressure if growth is pushed aggressively in a tight liquidity environment. Investors are likely to watch upcoming quarters for continued deposit traction and whether margins remain stable as the bank manages its growth mix.