The profit after tax (PAT) remained flat versus Rs 18,641 crore in Q2FY26
The bank earned Rs 76,751.16 crore in interest income which was up 1% YoY compared to Rs 76,007 crore while it paid Rs 44,136 crore in the quarter under review, down nearly 3% from Rs 45,353 crore posted in the corresponding quarter of the last financial year.
HDFC Bank’s net interest income (NII) for the quarter ended December 31,2025 grew by 6.4% to Rs 32,620 crore from Rs 30,650 crore for the quarter ended December 31, 2024. Core net interest margin was at 3.35% on total assets, and 3.51 % based on interest earning assets.
What should investors do?
Citi maintains a Buy rating on HDFC Bank with a target price of Rs 1,200, implying an upside of gnarly 30% from current levels. The international brokerage noted that Q3FY26 performance was steady. Net interest margins expanded by 8 bps, supported by a lower cost of funds. Management reiterated confidence in outperforming system loan growth in FY27, while the loan-to-deposit ratio remains elevated but manageable, with a clear glide path aided by deposit acceleration. The bank continues to follow a granular deposit strategy, avoiding aggressive bulk pricing. Asset quality remains pristine, with credit costs guided at 50–55 bps.
Bernstein has reiterated an Outperform rating with a Rs 1,200 target price, highlighting a steady Q3FY26 alongside constructive management commentary and a visible pickup in credit growth momentum. The bank expects system-level loan growth in FY26 and faster-than-system growth in FY27. The loan-to-deposit ratio is on a downward glide path, while margins are supported by lagged deposit repricing, lower borrowings and gradual improvement in CASA. Deposit mobilisation remains disciplined and granular, with limited reliance on bulk deposits. Asset quality continues to be strong, with no signs of emerging stress, and improving branch productivity is expected to support deposit-led growth without aggressive network expansion.Elara Capital has upgraded HDFC Bank to Buy with a target price of Rs 1,147, citing an improved liquidity environment and a more supportive regulatory approach that eases balance-sheet realignment. The brokerage notes that the bank has been navigating a complex trade-off between growth, NIMs, LCR and the CD ratio, which had the potential to cause dislocation. While the transition—particularly on the LDR front—remains challenging, Elara believes the toughest phase is behind. Following a 7% underperformance versus the broader index over the past month, the stock trades at 1.9x FY28E P/BV, making the risk–reward favourable.
Motilal Oswal has reiterated a Buy rating with a target price of Rs 1,175, stating that HDFC Bank delivered an in-line Q3FY26, with the impact of the new labour code offset by the release of contingency provisions. NIMs expanded by 8 bps QoQ, while loan growth showed signs of traction, pushing the CD ratio to 98.7%. Management expects this to moderate to 95–96% in FY26 and below 90% in FY27, as deposit growth is projected to outpace advances next year. Branch additions will remain calibrated. The bank released Rs 1,040 crore of contingent provisions related to a large borrower group and maintained floating provisions of Rs 21,4oo crore, taking the total buffer to Rs 37,100 crore (1.3% of loans). Repricing of term deposits and better operating leverage are expected to support return ratios over the medium term.
HDFC Bank shares are down 6% in the last one month.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)