6 days ago
HDFC Bank Underperforms in 2026, Analysts See Upside
HDFC Bank’s share price has dropped a lot this year.
This has made some investors worried about the bank.
Several brokerages still think the shares could rise over the next year.
Their price targets are higher than the stock’s recent price of Rs 713.95.
JPMorgan said the bank could benefit if loan growth improves.
Analysts also want to see stronger deposits and continued good asset quality.
Some concerns include greater use of wholesale funding and risks in certain types of loans.
Reports of customers alleging problems with a life-settlement product have added to the negative attention around the bank.
HDFC Bank shares have fallen 28% in 2026, making them the fifth-worst Nifty performer.
Haitong, Bernstein and JM Financial issued positive views, with targets of Rs 990, Rs 1,150 and Rs 800.
JPMorgan maintained an Overweight view, citing an attractive risk-reward after the stock’s underperformance.
Analysts flagged deposit mobilisation, wholesale funding, contingent liabilities and some loan-quality risks.
Reports of alleged mis-selling tied to a Carlisle life-settlement product have added pressure, while one analyst sees short-term downside to Rs 675-680.
- Who
- HDFC Bank, its investors and brokerages including Haitong, Bernstein, JM Financial and JPMorgan.
- What
- HDFC Bank shares have underperformed in 2026, while analysts have issued positive longer-term views alongside warnings about near-term and balance-sheet risks.
- Where
- The share-price developments concern HDFC Bank, including allegations involving its Dubai operations.
- When
- The broker recommendations were reported this week, with JPMorgan’s view dated August 20 and Haitong’s recommendation issued Wednesday.
- Why
- The stock has weakened amid concerns about deposits, funding, loan risks and alleged mis-selling, but brokerages see potential upside based on valuation, asset quality and future credit growth.
Bullish case
Risks and concerns
Share-price outlook
Bullish case
Haitong, Bernstein, JM Financial and JPMorgan see attractive upside or risk-reward after HDFC Bank’s underperformance.
Risks and concerns
One analyst expects further short-term weakness, with a possible decline to Rs 675-680.
Growth and valuation
Bullish case
JPMorgan expects HDFC Bank to benefit from a recovery in system credit growth and believes its valuation could be re-rated.
Risks and concerns
Concerns about deposit mobilisation, market-share gains in a constrained deposit environment and balance-sheet normalisation could weigh on earnings forecasts.
Balance-sheet and asset quality
Bullish case
The bank has reduced borrower and NPA concentration, increased its share of better-rated corporates, maintained a strong asset-quality record and continued reducing legacy e-HDFC borrowings.
Risks and concerns
JM Financial cited rising commercial-real-estate and capital-market loans, higher contingent liabilities, falling retail-deposit share, greater wholesale-funding reliance and deterioration in parts of agriculture lending.
Key facts
- 2026 share-price performance
- HDFC Bank has fallen 28%, making it the fifth-worst Nifty performer.
- Recent share price
- Rs 713.95 in Thursday’s trade.
- Haitong target
- Rs 990, with an Outperform recommendation.
- Bernstein target
- Rs 1,150, with an Outperform recommendation.
- JM Financial target
- Rs 800.
- JPMorgan view
- Overweight, citing an attractive risk-reward after recent underperformance.
- Short-term downside estimate
- One analyst expected the stock could fall to Rs 675-680.
- Deposit market share
- JM Financial said HDFC Bank gained 33 basis points in overall deposit market share.
Quotes
JM Financial
Brokerage assessing HDFC Bank’s balance-sheet and asset-quality trends.
“Asset quality trends were stable during FY26. While stress improved across the services and retail portfolios, it deteriorated further in agriculture, driven by higher delinquencies in animal husbandry and select PSL segments. Consequently, credit cost in the agriculture portfolio increased. The rising share of ageing NPAs also warrants monitoring as the bank transitions to the ECL framework.”
businesstoday.in
“We rate ICICI, Axis, HDFC and IIB as Outperform; KMB and SBI as Market-Perform. We update our models for Axis, KMB and SBI to reflect the latest quarterly numbers and make modest changes to our assumption on growth and margins. All encompassing, our changes result in less than 2 per cent change to our EPS estimates with no change to our target prices.”
businesstoday.in
Sources
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