Leading global brokerage CLSA has issued an optimistic assessment of HDFC Bank , setting a price target of ₹1,200.00 per share while characterizing the current investment opportunity as having an "extremely favourable" risk-reward profile.

Brokerage Outlook and Price Target

CLSA's bullish stance on HDFC Bank comes with a specific price target that reflects confidence in the banking major's prospects. The brokerage firm has positioned the stock as an attractive investment opportunity in the current market environment.

Addressing Investor Concerns

The global brokerage has directly addressed prevailing market concerns surrounding HDFC Bank's performance metrics. CLSA maintains that current investor worries are not reflective of the bank's fundamental strength and long-term prospects.

According to CLSA's analysis, the primary concerns affecting investor sentiment include:

• Slower deposit growth patterns
• Limited improvement in margins following the HDFC Limited merger

Temporary Nature of Current Issues

CLSA emphasizes that these concerns are "largely misunderstood or short term in nature." The brokerage firm suggests that the market may be overreacting to what are essentially transitional challenges rather than structural problems.

The assessment indicates that issues related to deposit growth and margin pressures are temporary phenomena that do not fundamentally alter the bank's strong market position or growth trajectory. CLSA's perspective suggests these concerns will likely resolve as the integration process progresses and market conditions normalize.

Global brokerage CLSA has maintained its 'Outperform' rating on HDFC Bank , projecting a potential upside of over 27% from current levels despite ongoing pressure on the stock. The brokerage has set a target price of ₹1,200.00 on the stock, which is currently trading near ₹943.50 on the BSE.

Current Market Performance

The stock has experienced notable weakness in recent months, falling 6.2% from its January high of ₹1,006.30. The performance data reveals a consistent downward trend across multiple timeframes:

CLSA's Investment Thesis

Addressing investor concerns around slower deposit growth and the lack of immediate margin improvement post-merger, CLSA believes these issues are either temporary or misunderstood. The brokerage expects FY27 to be a 'bounce-back year' for the bank, supported by improving operating dynamics and cost rationalization.

CLSA highlights that valuations are now attractive, with HDFC Bank trading at a 10-12% price-to-book discount to ICICI Bank. The brokerage believes this valuation gap may not be justified in the long term, especially as cost discipline improves.

Operational Efficiency Improvements

The bank is demonstrating signs of operational tightening through several key initiatives:

• Core operating expenses expected to grow at 5-7% year-on-year
• Loan growth projected at 10%
• Slower hiring practices
• Reallocation of staff to customer-facing roles

Financial Projections

CLSA forecasts HDFC Bank's core pre-provision operating profit to grow at high-teens levels over the next two years, supported by operational efficiency and loan book expansion. Although return on equity is currently lower than ICICI Bank's, CLSA notes that at 1.7x FY28 price-to-book ratio, the risk-reward for HDFC Bank appears 'extremely favourable.'

Technical Analysis

On the technical front, HDFC Bank shares are currently positioned below all their significant daily exponential moving averages. The RSI stands at 25.60 according to Trendlyne data, indicating the stock is approaching oversold territory, as readings below 30.00 typically suggest potential for a rebound.