Archive · 25 Aug 2026
JM Financial Cuts HDFC Bank Target Amid Funding Concerns
JM Financial still thinks HDFC Bank’s shares may perform well, but it has become more cautious.
It kept its ‘Add’ rating but lowered the target price from Rs 900 to Rs 800.
The main concern is that retail deposits became a smaller part of the bank’s funding.
The bank used more wholesale funding and certificates of deposit to meet its needs.
Agriculture loans also showed more repayment problems, especially in animal husbandry and some priority-sector segments.
On the positive side, retail and services loans became healthier.
The bank also reduced its dependence on a small group of large borrowers and troubled accounts.
Investors will be watching deposits, funding costs, agricultural stress and future provisioning needs.
JM Financial retained its ‘Add’ rating on HDFC Bank but cut its target price to Rs 800 from Rs 900.
The brokerage cited weaker retail deposit growth, greater wholesale funding reliance and a 114% liquidity coverage ratio.
Agriculture’s gross non-performing asset ratio rose to 4.2% in FY26 from 3.8% in FY25.
Retail and services asset quality improved, while borrower and stressed-asset concentration declined.
The top 20 borrowers accounted for 9.2% of advances, while the top 20 NPA accounts represented 11.9% of gross NPAs in FY26.
- Who
- HDFC Bank and brokerage firm JM Financial.
- What
- JM Financial lowered HDFC Bank’s target price to Rs 800 from Rs 900 while retaining its ‘Add’ rating.
- When
- The assessment covers HDFC Bank’s FY26 financial position.
- Where
- The developments concern HDFC Bank’s banking operations in India.
- Why
- JM Financial cited pressure on the deposit mix, increased wholesale funding reliance and rising agricultural asset-quality stress, despite improvements in several other loan segments.
Positive factors
Risks and concerns
Asset quality
Positive factors
Retail and services asset quality improved, while industrial asset quality remained broadly stable.
Risks and concerns
Agriculture asset quality deteriorated, with higher delinquencies in animal husbandry and select priority-sector lending segments.
Balance-sheet concentration
Positive factors
The share of advances held by the top 20 borrowers and the concentration of the top 20 NPA accounts both declined.
Risks and concerns
Exposure to sensitive segments increased, with commercial real estate at 7.3% of loans and capital-market exposure at 2.7%.
Funding and deposits
Positive factors
Overall deposit market share rose by 33 basis points year on year, and legacy borrowings from the erstwhile Housing Development Finance Corporation continued to decline.
Risks and concerns
Retail deposits lost share, certificates of deposit usage increased and wholesale funding became more important, potentially limiting faster loan growth.
- Brokerage view
- JM Financial retained its ‘Add’ rating.
- Revised target
- Rs 800, reduced from Rs 900.
- Agriculture GNPA
- Rose to 4.2% in FY26 from 3.8% in FY25.
- Liquidity coverage ratio
- Moderated to 114%.
- Deposit market share
- Increased by 33 basis points year on year.
- Top 20 borrower share
- Declined to 9.2% of advances in FY26 from 9.3% a year earlier and 13.9% in FY23.
- Top 20 NPA concentration
- Declined to 11.9% of gross NPAs from 20.9% in FY25.