HDFC Bank Shares Drop 4% Over Four Sessions Ahead of Q3 Results on January 17
HDFC Bank shares declined 4% over four sessions to ₹942 ahead of Q3 results on January 17. The bank reported strong Q3 business metrics with advances growing 9.8% YoY to ₹29.46 lakh crore and deposits rising 11.5% to ₹28.60 lakh crore. Brokerages present mixed margin outlook but remain positive on asset quality and long-term prospects.
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HDFC Bank shares extended their decline for a fourth consecutive session on January 8, dropping as much as 1% to an intraday low of ₹942. The stock has shed nearly 4% over this period as investors await the bank's third-quarter earnings announcement scheduled for January 17.
Q3 Business Performance Shows Strong Growth
The bank reported robust business metrics for the December quarter, demonstrating sustained growth across key parameters:
| Business Metric | Q3 Value | YoY Growth |
|---|---|---|
| Average Advances Under Management | ₹28.64 lakh crore | ~9% |
| Period-end Advances Under Management | ₹29.46 lakh crore | 9.8% |
| Period-end Gross Advances | ₹28.45 lakh crore | 11.9% |
| Average Deposits | ₹27.52 lakh crore | 12.2% |
| Period-end Total Deposits | ₹28.60 lakh crore | 11.5% |
Mixed Brokerage Views on Margin Outlook
Brokerages present varying perspectives on the bank's near-term margin performance. Yes Securities expects sequential loan growth in the 2.5% range, with net interest income growth likely to trail loan growth marginally. The brokerage anticipates net interest margins to soften sequentially as the decline in yields on advances outpaces the reduction in cost of deposits.
Conversely, Systematix presents a more optimistic margin picture, noting that provisional gross advances grew 2.7% quarter-on-quarter. The brokerage expects the fall in yield on advances to be fully offset by a decline in cost of deposits, potentially leading to marginally higher net interest margins sequentially.
Asset Quality and Operational Trends
Most brokerages remain positive on asset quality improvements and operational efficiency:
- Fee income growth expected to outpace loan growth
- Operating expense growth anticipated to remain below overall business growth
- Asset quality trends likely to improve sequentially
- Slippages and provisions both expected to decline quarter-on-quarter
Deposit Composition and Growth Strategy
The bank demonstrated strong deposit mobilization capabilities during Q3:
| Deposit Category | Average Balance | YoY Growth |
|---|---|---|
| CASA Deposits | ₹8.98 lakh crore | 9.9% |
| Time Deposits | ₹18.54 lakh crore | 13.4% |
| Period-end CASA | ₹9.61 lakh crore | 10.1% |
With the loan-to-deposit ratio now below 100%, Axis Securities believes the bank is positioned to accelerate growth in FY26 to align with system-wide trends. A further pickup in growth in FY27, alongside sustained deposit mobilisation, should help bring the LDR down to sub-90%.
Long-term Outlook Remains Positive
InCred Equities maintains an optimistic long-term view, expecting margins to trough at levels better than earlier anticipated. The brokerage maintains an ADD rating with a target price of ₹1,180, implying a valuation of about 2.5x FY27F core P/BV. This outlook is supported by strong management capabilities, resilient underwriting across cycles, and the bank's ability to consistently gain market share through healthy deposit growth and stable asset quality.
Despite the recent decline, HDFC Bank shares have risen approximately 12% in 2025, reflecting the market's confidence in the bank's fundamental strength and execution capabilities.
Historical Stock Returns for HDFC Bank
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.51% | -4.97% | -6.11% | -5.88% | +11.18% | +31.57% |
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