Nomura Reaffirms 'Buy' Rating on HDFC Bank, Revises Target to ₹1,095

HDFC Bank has reported strong loan growth, rising 3.1% quarter-on-quarter (QoQ) and 8.9% year-on-year (YoY) in gross advances. After adjusting for interbank participatory certificate (IBPC) sales, net loans grew 4.4% QoQ and 9.9% YoY, showing healthy demand across both retail and wholesale segments.

Following this performance, Nomura has reaffirmed its 'Buy' rating on HDFC Bank and revised its target price to ₹1,095 from ₹2,190, after the bank’s 1:1 bonus issue on August 27, 2025. The bank’s core operations are now valued at 2.3 times projected book value per share for June 2027, with subsidiaries contributing an extra ₹120 per share.

Deposit growth also remains strong. Total deposits increased 1.4% QoQ and 12.1% YoY, with CASA (Current Account Savings Account) deposits up 1.3% QoQ and 7.4% YoY, and term deposits rising 1.4% QoQ and 14.6% YoY. The CASA ratio stayed stable at 33.9%, and the loan-to-deposit ratio improved by about 285 basis points QoQ to 99%, reflecting better utilization of funds.

Looking ahead, Nomura expects HDFC Bank to sustain credit growth at or slightly above system levels through FY26, demonstrating confidence in the bank’s resilient fundamentals and market strength.

However, there are some risks. Challenges in deposit mobilization could impact loan growth, while operating pressures might reduce profit margins. Despite this, Nomura views HDFC Bank as a high-quality franchise, with strong capital, consistent loan growth, and a healthy balance sheet, making it a good long-term investment.

The bank’s steady growth across loans and deposits, combined with a strong CASA ratio, ensures low-cost funding, while the improving loan-to-deposit ratio shows efficient use of resources. HDFC Bank’s ability to manage retail and wholesale banking segments effectively positions it well for future expansion.

In short, HDFC Bank’s robust loan growth, solid deposits, and strong fundamentals support Nomura’s reaffirmed 'Buy' rating. Investors looking for long-term stability and consistent returns may find HDFC Bank a reliable choice in India’s banking sector.