HDFC Bank Loan Growth Accelerates to 15.4%, Analysts Raise Targets

Shares of HDFC Bank rose 3% on Monday, leading the Nifty 50 gainers, after the lender released its provisional update for the June quarter. The stock traded at ₹824 on the NSE at 10:10 a.m.

Gross advances grew 15.4% year-over-year, up from 12% in the March quarter. Period-end deposits stood at about ₹31,70,500 crore, a 14.7% increase from a year earlier. The headline numbers triggered a fresh wave of analyst notes.

Bernstein retained its outperform rating with a ₹1,150 target price. The brokerage described the update as reflecting a balance between “healthy enough” loan growth and a largely unchanged loan-to-deposit ratio. Morgan Stanley maintained an overweight rating with a ₹1,025 target and said it expects the stock to rise over the next 60 days. Jefferies reiterated its buy rating with a ₹1,050 target, noting deposit mobilisation of ₹652 billion, up 32% year-over-year.

The simple read is that loan growth accelerated and deposits kept pace. The better market read requires looking past the period-end snapshot. Bernstein pointed out that average loan and deposit balances grew slower than the period-end figures. That gap implies net interest income growth could lag the headline expansion in loans and deposits. The distinction matters for margin forecasts in the coming quarters.

Morgan Stanley added that the pickup in year-over-year loan growth was meaningful for investor sentiment. The brokerage also said HDFC Bank's valuation remains attractive relative to historical bands. A narrowing performance gap with peers should support further gains, it said.

In a broader sector note, Morgan Stanley said most banks saw loan and deposit growth pick up on a seasonally adjusted basis. HDFC Bank's acceleration stood out. Axis Bank saw deposit growth top expectations. Kotak Mahindra Bank showed moderation. IndusInd Bank posted early signs of balance-sheet stabilisation alongside improved deposit momentum.

For HDFC Bank, the deposit story is the central variable. Jefferies described the ₹652 billion deposit addition as healthy. CASA deposit growth continued to improve, with the gap between total deposits and CASA narrowing. If deposit momentum persists, it supports the bull case. A reversion would revive the margin pressure flagged in previous quarters.

AlphaScala's proprietary score for HDFC Bank sits at 46 out of 100, labelled Mixed. That score factors in the deposit gap and margin headwinds visible in earlier data. The full HDFC Bank stock page provides the complete breakdown. The score tempers the bullish consensus, serving as a reminder that one quarterly update does not reset the structural challenges.

The deposit gap has been a recurring theme in our coverage – see HDFC Bank Q1: Loans Jump 15.4%, Deposit Gap Pressures Margin.

The full quarterly result is due later this month. Management commentary on net interest margins and deposit trajectory will determine whether the stock holds the gains. For traders, the upgrade cycle provides short-term momentum. For longer-term holders, the deposit gap remains the metric to track.