Speaking to ET Now, Shah said the bank’s operational performance shows no major disappointment. He highlighted the addition of 473 new branches during the quarter, which is expected to support balance-sheet growth in the coming periods. He also noted that the interest rate environment remains supportive, with cumulative rate cuts of around 1.25% last year and the possibility of mild easing continuing into the new financial year.
FII selling behind stock correction
The stock has corrected nearly 6% so far this month, but Shah attributed this largely to sustained foreign institutional investor (FII) selling rather than company-specific concerns. Since October 2024, FIIs have been trimming exposure to large-cap stocks, with frontline names such as HDFC Bank, Reliance Industries and Larsen & Toubro bearing the brunt of the selling pressure.
“These numbers should help soothe sentiment,” Shah said, adding that the broader BFSI sector continues to look attractive relative to other segments of the market.
Target price range of ₹1,100–₹1,150 for the stock
On valuation, Shah said Geojit is working with an approximate target price range of ₹1,100–₹1,150 for the stock, subject to a detailed post-results analysis.
He also addressed the one-time labour code-related cost impact of around ₹800 crore. Adjusting for this, Shah said underlying profitability would have been materially stronger, potentially higher by ₹500–₹600 crore. Based on trends seen across sectors, he expects a large part of such costs to be absorbed in one quarter, with residual impact spread out over subsequent periods.
Commenting on near-term positioning, Shah said downside risk appears limited at current levels following the recent sell-off. Existing investors may consider holding the stock, while long-term investors could look to accumulate gradually on declines, barring any fresh bout of heavy FII selling.Overall, Shah believes HDFC Bank’s fundamentals remain intact, with steady growth prospects as branch expansion, stable margins and easing funding costs support earnings over the medium term.