# HDFC Bank — Updated Analysis (Q4 & FY26)

**NSE: HDFCBANK | NYSE: HDB | ISIN: INE040A01034**
*Refresh of the 2025 Q4-merger note. Covers Q4 FY26 (Jan–Mar 2026) and full-year FY26 (April 2025 – March 2026), reported 18 April 2026.*

Sources: HDFC Bank standalone & consolidated audited results, Form 6-K to NYSE (18 Apr 2026), Q4 FY26 earnings call transcript, ICICI Securities Retail Research result update (19 Apr 2026).

---

## FY26 at a glance

| Metric | Value |
|---|---|
| Standalone PAT (FY26) | **₹74,671 cr** (+10.9% YoY) |
| Consolidated PAT (FY26) | ₹76,030 cr |
| Q4 NIM (total assets) | 3.38% |
| Gross NPA | 1.15% |
| Net NPA | 0.38% |
| Deposits | ₹31.05 lakh cr (+14.4% YoY) |
| Gross advances | ₹29.60 lakh cr (+12.0% YoY) |
| Total CAR (Basel III) | 19.7% (CET1 17.3%) |
| FY26 dividend / share | ₹15.50 (₹2.50 special interim + ₹13 final) |

---

## Q4 FY26 vs Q3 FY26 vs Q4 FY25

*Standalone, ₹ crore. Source: HDFC Bank board filing, 18 Apr 2026.*

| Metric | Q4 FY25 | Q3 FY26 | Q4 FY26 | YoY | QoQ |
|---|---:|---:|---:|---:|---:|
| Net interest income | 32,066 | 32,615 | 33,082 | +3.2% | +1.4% |
| Other income | 12,028 | 13,254 | 13,199 | +9.7% | −0.4% |
| Operating profit (PPOP) | 26,537 | 27,098 | 27,803 | +4.8% | +2.6% |
| Provisions | 3,193 | 2,838 | 2,610 | −18.3% | −8.0% |
| Net profit (PAT) | 17,616 | 18,654 | 19,221 | +9.1% | +3.0% |
| NIM (total assets) | 3.54% | 3.35% | 3.38% | −16 bps | +3 bps |
| Gross NPA ratio | 1.33% | 1.24% | 1.15% | −18 bps | −9 bps |
| Net NPA ratio | 0.43% | 0.42% | 0.38% | −5 bps | −4 bps |
| Credit cost (annualised) | — | 0.41% | 0.21% | — | −20 bps |

### Quarterly NII & PAT trend (₹ crore)

| Quarter | NII | PAT |
|---|---:|---:|
| Q4 FY25 | 32,066 | 17,616 |
| Q1 FY26 | 31,438 | 18,155 |
| Q2 FY26 | 31,552 | 18,641 |
| Q3 FY26 | 32,615 | 18,654 |
| Q4 FY26 | 33,082 | 19,221 |

NII growth slowed sharply from +13.0% in FY25 to +4.9% in FY26 — the central earnings story.

### NIM trajectory

| Quarter | NIM (% of total assets) |
|---|---:|
| Q4 FY25 | 3.54% |
| Q1 FY26 | 3.46% |
| Q2 FY26 | 3.40% |
| Q3 FY26 | 3.35% |
| Q4 FY26 | 3.38% |

NIM compressed 16 bps YoY but **bottomed in Q3 FY26** and ticked up 3 bps QoQ in Q4. Management flags 5–6 quarter lag on deposit repricing — most of that benefit is still ahead.

---

## FY26 full-year vs FY25

### Standalone P&L (₹ crore)

| Line item | FY25 | FY26 | YoY |
|---|---:|---:|---:|
| Interest earned | 3,00,517 | 3,07,522 | +2.3% |
| Interest expended | 1,77,847 | 1,78,836 | +0.6% |
| Net interest income | 1,22,670 | 1,28,686 | +4.9% |
| Other income | 45,632 | 62,533 | +37.0% |
| Operating expenses | 68,175 | 72,660 | +6.6% |
| Operating profit | 1,00,127 | 1,18,558 | **+18.4%** |
| Provisions | 11,649 | 23,390 | +100.8% |
| Profit before tax | 88,478 | 95,169 | +7.6% |
| **PAT (standalone)** | **67,347** | **74,671** | **+10.9%** |
| PAT (consolidated) | — | 76,030 | — |
| EPS (₹, diluted) | 43.95 | 48.40 | +10.1% |
| Book value / share (₹) | 327.6 | 365.7 | +11.6% |
| Return on assets | 1.91% | 1.94% | +3 bps |
| Return on equity | 13.4% | 13.3% | −10 bps |

### Balance sheet (₹ crore)

| | Value |
|---|---:|
| Total assets | 43,64,886 |
| Deposits | 31,05,250 (+14.4%) |
| — CASA | ₹10,605 bn (34.1% of dep.) |
| — Time deposits | ₹20,450 bn (+15.5%) |
| Gross advances | 29,60,000 (+12.0%) |
| Net worth | 5,46,325 |
| Borrowings / assets | 11.2% (vs 14.0% in FY25) |

### Capital adequacy (Basel III)

| Ratio | Value |
|---|---:|
| Total CAR | 19.7% |
| Tier 1 | 17.7% |
| CET1 | 17.3% |
| Regulatory minimum | 11.9% |

---

## Loan growth: corporate & MSME led, retail still healing

| Segment | FY26 YoY growth |
|---|---:|
| Corporate | +13.0% |
| MSME | +17.2% |
| Retail | +6.2% |
| Mortgages (under management) | ~+7.5% |

System credit growth tracked ~11–12%, so HDFC Bank is now growing **in line with system** after two years of sub-par growth (FY25 advances grew only ~5.5%).

> **Liability franchise re-engaging.** Deposits +14.4% YoY outpaced advances +12.0%, driving the credit-deposit (CD) ratio lower again — the post-merger LDR normalisation thesis is playing out. CASA grew 12.3% with a 53 bps QoQ uptick. Borrowings dropped to 11.2% of assets (from 14.0% in FY25), reducing high-cost merger-era HDFC Ltd liabilities.

> **Retail recovery is the next catalyst.** Wheels, personal loans and mortgages are sequentially picking up after a soft FY26 (~6% YoY). Management pointed to ~9,700-branch distribution, digital sourcing and ~100m customer base as the cross-sell engine for FY27.

---

## Asset quality & provisions

### NPA ratios — Q4 FY25 to Q4 FY26

| Quarter | Gross NPA % | Net NPA % |
|---|---:|---:|
| Q4 FY25 | 1.33% | 0.43% |
| Q1 FY26 | 1.33% | 0.48% |
| Q2 FY26 | 1.24% | 0.45% |
| Q3 FY26 | 1.24% | 0.42% |
| Q4 FY26 | 1.15% | 0.38% |

### Provisioning

FY26 provisions doubled to **₹23,390 cr** (FY25: ₹11,649 cr) — but this is largely **contingent / floating buffer building**, not slippage. Q4 credit cost was just **21 bps** annualised (vs 41 bps in Q3) and management reiterates "no emerging stress."

Provision coverage / floating buffer is now **~125 bps of loans** — best-in-class among large Indian banks and the cushion that underwrites the RoA outlook.

FY26 RoA held at 1.94% (FY25: 1.91%) despite NIM compression — evidence that the franchise has multiple levers (fee income, opex leverage, low credit cost) beyond pure margin.

---

## Valuation & market view

| | Value |
|---|---:|
| CMP NSE (19 Apr 2026) | ₹800 |
| HDB ADR (15 May 2026) | $24.45 |
| Market cap (ADR-implied) | ~$127 bn |
| P/E FY26 | 16.5x |
| P/ABV FY26 | 2.2x |
| ADR dividend yield | 1.29% |
| 52-week range (NSE) | ₹727 – ₹1,020 |
| 52-week range (HDB) | $23.91 – $39.81 |

### ICICI Direct — Q4 FY26 Result Update (19 Apr 2026): **BUY**

- **Target ₹1,050** vs CMP ₹800 → ~31% upside, 12-month
- **SOTP**: 2.1× FY28E adjusted book for the bank (₹930) + ₹120 for subsidiaries (HDFC AMC, HDFC Life, HDFC ERGO, HDB Financial, HDFC Securities), 20% holding discount
- **Estimates**: PAT to compound ~12.9% over FY26–28E to ₹95,200 cr; NII growth re-accelerating to 12.5% / 14.7% in FY27E / FY28E as deposit repricing flows through
- RoA modelled at 1.8 → 1.9%, RoE flat at ~13.7%
- FY27E EPS ₹54.8 · FY28E EPS ₹61.9 · FY28E ABV ₹444 · P/E FY28E 12.9x

> **ADR / domestic disconnect to watch.** On 15 May 2026 the HDB ADR was at $24.45, near the bottom of its $23.91–$39.81 52-week range. This contrasts with the local listing, which sits closer to its 52-week high of ₹1,020 (low ₹727). FII holding has stepped down from 48.8% (Jun-25) to 44.0% (Mar-26) while DII holding has risen from 35.8% to 40.2% over the same window — domestic flows have largely absorbed foreign selling, but ADR sentiment remains the weaker leg.

---

## What changed since the 2025 note

| Theme | Position in 2025 note | Updated FY26 read |
|---|---|---|
| Earnings momentum | Q4 FY25: NII grew but margins under pressure post-merger | FY26 PAT +10.9%; NIM bottomed Q3, ticked up Q4. Op. profit +18.4%. |
| Merger integration | In-flight, transition costs weighing on near-term profits | Borrowings down from 14% → 11% of assets; ~9,700 branches & ~100m customers — management calls it the harvest phase. |
| Loan growth | Healthy corporate growth, watch asset quality | Advances re-accelerated to +12.0% (FY25: ~5.5%). MSME +17%, corporate +13%; retail subdued at +6%. |
| Deposits / LDR | Watching for deposit repricing & cost of funds | Deposits +14.4%, ahead of credit; CASA 34.1%; LDR normalising. Mgmt: "LDR is not a constraint." |
| Asset quality | Historically strong, post-merger book under monitoring | GNPA 1.33% → 1.15%; NNPA 0.43% → 0.38%. Credit cost just 21 bps in Q4. |
| Capital | Above regulatory minimums, multiple capital tools used | CAR 19.7%, CET1 17.3% — among strongest in Indian banking. Board has authorised up to ₹60,000 cr in AT1/Tier 2/infra bonds. |
| Shareholder returns | No specific FY25 dividend cited | FY26 total dividend ₹15.50/share (₹2.50 special interim + ₹13 final). Bonus issue completed (face value adjusted to ₹1). |
| Governance | Not flagged in 2025 note | Chairman exit and a "Dubai matter" surfaced in FY26 — mgmt calls them non-disruptive; broker notes flag as a risk to monitor. |

---

## Risks & watchpoints into FY27

- **Margin trajectory.** NIM is below the pre-merger ~4% range. Recovery depends on the 5–6 quarter deposit-repricing lag fully transmitting (only 40–50 bps so far) and on continued substitution of high-cost merger-era borrowings with deposits. A pause in RBI cuts could slow the gain.
- **Retail loan re-acceleration.** Retail growth of ~6% in FY26 lags MSME and corporate. The thesis assumes wheels, PL and mortgages re-accelerate in FY27. Without that, mix shift keeps yields lower.
- **Governance overhang.** Chairman transition and the 'Dubai matter' have not affected operations but remain reputational tail risks. ICICI Direct flags "leadership rejig and deposit accretion may remain watchful."
- **ADR-specific currency.** USD/INR moves are now a meaningful driver of HDB returns vs HDFCBANK on the NSE. ADR has lagged the local listing through FY26 — a re-rating or reversal depends on FII flows returning to Indian financials.

---

## Bottom line

FY26 is the first full year that argues the merger is moving from "digesting" to "harvesting." Earnings re-grew double digits, asset quality improved on every metric, the borrowings overhang is shrinking, and the deposit franchise stayed ahead of credit — exactly the sequence the bull case required. NIM has clearly bottomed but the upside from here depends on lagged deposit repricing.

Versus the 2025 note, the picture is materially less ambiguous: growth and asset quality are now confirmed, and the open questions have narrowed to (a) the pace of margin recovery, (b) retail re-acceleration, and (c) governance optics. With CAR at 19.7%, RoA at 1.94% and the domestic listing still ~24% below ICICI Direct's ₹1,050 target, the risk-reward into FY27 looks better than it did a year ago — most evidently for the locally listed share, less so for the lagging HDB ADR.

---

*Disclaimer: not investment advice. All figures from HDFC Bank standalone & consolidated audited results for the year ended 31 March 2026 (board meeting 18 April 2026, Form 6-K filed 18 April 2026), supplemented by the Q4 FY26 earnings call transcript and ICICI Securities' Retail Equity Research result update dated 19 April 2026. ADR price as of 15 May 2026 (Yahoo Finance).*