This year, HDFC Bank’s shares have been under the most pressure among big private banks. So far in the year 2026, the stock has fallen by about 20%, due to which the question in the minds of investors is whether this is a good buying opportunity or there are still big challenges before the bank.
The bank has been facing changes in leadership and issues related to corporate governance for some time. These have also affected important financial figures like Net Interest Margin (NIM) of the bank. Although some of these concerns seem to be subsiding now, investors still want to know what will drive the bank’s growth going forward.
Regarding this, Financialexpress.com talked to market experts whether the problems related to governance are over now, what will be the biggest trigger for the stock going forward and whether it would be right to invest at the current valuation or not.
Investors’ eyes on this big decision
In the last few months, the biggest question regarding HDFC Bank has been regarding its leadership and governance. Vinod Nair, head of research at Geojit Investments, says that now the uncertainty in this matter has ended to a great extent. According to him, the allegations made by the former chairman of the bank were not found true in the independent legal investigation. The credibility of the bank’s board has also been strengthened with the appointment of Rajeev Kumar. However, investors are keeping an eye on another important issue.
Gyanada Vaidya, BFSI Research Analyst of Axis Direct, says that the re-appointment of the current MD and CEO of the bank will be very important. This will enable the long-term strategy of the bank to proceed without any hindrance and will also impact the share performance. He also said that the senior leadership team of the bank has been further strengthened with the appointment of Rajiv Kumar as part-time chairman and Puneet Sharma as CFO designee.
Now there is no governance, NIM will become the biggest trigger
Experts believe that now profitability will play a greater role than governance in deciding the direction of HDFC Bank shares. According to Vinod Nair, the biggest trigger going forward will be improvement in Net Interest Margin (NIM). He said that the asset quality of the bank is still the strongest in the industry, but the NIM is currently at around 3.4%, whereas before the merger it used to be more than 4%. The reasons behind this are high credit-deposit ratio, increased cost of raising funds and low yield on loans. He believes that if margins improve by FY27, re-rating of the stock may be seen. In such a situation, the current valuation looks attractive for long-term investors.
Focus on strengthening the balance sheet
According to Gyanada Vaidya, HDFC Bank is laying special emphasis on increasing deposits to reduce its loan-to-deposit ratio (LDR). He said that instead of aggressively distributing loans, the bank is working on a strategy to give better returns as per the risk. According to him, there is currently a difference of about 150-200 basis points between the credit growth of HDFC Bank and other big private banks. If this difference reduces then it will be positive for the stock.
Asset quality remains strong
Experts believe that despite the current economic uncertainties, there is no possibility of any major loss in the asset quality of HDFC Bank. Gyanada Vaidya says that at present the scope for increasing NIM is limited. Therefore, the bank is focusing on improving Return on Assets (RoA) through operational efficiency, investment in technology and control on credit costs. According to his estimate, the bank’s RoA may increase from 1.8% in FY26 to 1.9% in the medium term.
Should you buy HDFC Bank now?
Both experts believe that the long-term fundamentals of HDFC Bank remain strong. Vinod Nair says that if NIM returns to normal levels in the next two years, then the current prices could be a good opportunity for long-term investors.
At the same time, Gyanada Vaidya believes that the risk-reward is good at the current level and the possibility of decline seems limited. But for new investment, she currently considers ICICI Bank and Kotak Mahindra Bank as better options than HDFC Bank, because the growth and return profile of these banks is stronger. His advice is that investors who already hold HDFC Bank shares should maintain their hold for now. However, new investments are not being recommended at this time.
share status
HDFC Bank shares have fallen by about 20% in the last one year. However, in the last one month it has seen a recovery of about 6%. The stock has remained under pressure even in the last six months. The bank’s 52-week high is Rs 1,020.50 and 52-week low is Rs 726.65.
What should investors keep an eye on?
According to analysts, now the major governance concerns regarding HDFC Bank have reduced to a great extent. Now the market will keep an eye on how successful the bank is in improving NIM, deposit growth, increasing credit growth compared to other private banks and maintaining strong asset quality. These things can decide the direction of the stock in the coming time.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsh advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
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