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Price: $25.81
Discount category: Far above intrinsic value
Intrinsic value source: AI estimate
Next earnings: 2027-01-16
Next earnings is estimate: Yes
Company name: HDFC Bank
Sector: Banks
About: HDFC Bank is one of the largest private-sector banks in India. It takes deposits and gives retail, small business and corporate loans, and it sells cards, payments and treasury services. It merged with its former parent, the mortgage lender HDFC Limited, in July 2023. Its main subsidiaries are HDB Financial Services (74.1%), HDFC Life Insurance (50.5%), HDFC ERGO General Insurance (50.2%), HDFC Asset Management (52.3%) and HDFC Securities (93.9%). At September 30, 2026, it had 9,706 branches, deposits of ₹33,274 billion, gross advances of ₹32,195 billion and a standalone balance sheet of ₹45,778 billion. Its fiscal year ends on March 31, and it reports under Indian GAAP in rupees. Its shares trade on the NSE and the BSE in India. Its ADSs trade on the New York Stock Exchange, and each ADS represents three equity shares.
Thesis: HDFC Bank trades at a premium to the AI estimate because investors pay for its long record of steady growth and few bad loans in a fast-growing economy. Deposits grew 18.8% and gross advances grew 16.3% in the year to September 30, 2026, and gross non-performing assets were only 1.11% of gross advances. But returns are lower than before the 2023 merger: annualized consolidated profit was about 13.5% of average equity in the first half of fiscal 2027 (a calculation from the results). The bank also had a year of leadership change. Its chairman resigned in March 2026 and cited his personal values and ethics, and a new chairman, a new chief executive and a new chief financial officer took office in 2026. For the premium to be earned, three things must be true. Profit growth must return to the pace of loan growth as treasury gains stop falling; profit after tax rose 4.7% in Q2 fiscal 2027, or about 12.6% without treasury gains. The net interest margin must stay near 3.2% on total assets while time deposits grow faster than low-cost current and savings deposits. No new governance problem may appear under the chief executive Anup Bagchi, who started on October 27, 2026. The Q3 fiscal 2027 report, expected in mid-January 2027, gives the next test. The full-year report in April 2027 shows the first results under the new leaders. If returns stay near current levels, the premium can shrink over the next two years.
Valuation: The intrinsic value for HDFC Bank is an AI estimate from November 9, 2026. It is not an analyst's value. An AI research agent calculated it from HDFC Bank's filings. The method is a justified price-to-book model. Value per share is book value per share times (ROE - g) / (r - g), where ROE is the long-term return on equity, r is the cost of equity in rupees and g is long-term growth. The results for the quarter and half year to September 30, 2026 (6-K, October 19, 2026) give consolidated share capital of ₹1,541.86 crore and reserves and surplus of ₹601,927.19 crore, with a face value of ₹1 per share. This gives 15,418.6 million shares and a consolidated book value of ₹391.39 per share. The same results give consolidated profit of ₹39,944.74 crore for the six months, which is about 13.5% of average equity when annualized (a calculation from the results), and consolidated profit of ₹76,025.97 crore for the year to March 31, 2026. The 20-F for the year to March 31, 2026 (July 29, 2026) says that each ADS represents three equity shares after the one-for-one bonus issue of August 2025. The ROE, cost of equity and growth in each case are assumptions. The low case assumes ROE of 13%, near the current level, a 12.5% cost of equity and 7.5% growth. It gives 1.10 times book, ₹430.53 per share and $13.67 per ADS. The base case assumes ROE of 15%, a 12% cost of equity and 8% growth. It gives 1.75 times book, ₹684.93 per share and $21.75 per ADS. The high case assumes ROE of 17%, near the levels before the 2023 merger, a 12% cost of equity and 8% growth. It gives 2.25 times book, ₹880.63 per share and $27.97 per ADS. The estimate uses an exchange rate of ₹94.46 per U.S. dollar, the market rate at the close on November 6, 2026, as an assumption. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is ₹670.26 per share and $21.29 per ADS. The value moves with the rupee. Switching costs and intangible assets are the main sources of the advantage. Customers keep their salary accounts, loans and cards at one bank for many years, and HDFC Bank has a strong brand and 9,706 branches. Its gross non-performing assets stayed low, at 1.11% of gross advances at September 30, 2026. But other large private banks offer the same products, the return on equity fell after the 2023 merger, and the 2026 leadership changes add risk. The estimate expects the advantage to last 10 years or more, but not 20 years. As of 2026-11-09.
Risks: The bank changed its chairman, chief executive and chief financial officer in 2026 after the chairman resigned with a statement about ethics. A review found no basis for the statement, but a new governance problem or action by the Reserve Bank of India can lower the value of the shares. Time deposits grew 22.8% and low-cost current and savings deposits grew 10.8% in the year to September 30, 2026. Higher funding costs can keep the net interest margin near 3.2% on total assets and hold back returns. Profit growth depends partly on treasury gains, which fell to ₹7.8 billion in Q2 fiscal 2027 from ₹23.9 billion a year earlier. Bond market moves can make profit growth uneven. The bank earns in rupees, and the ADS trades in U.S. dollars. A weaker rupee lowers the value of each ADS. Gross non-performing assets were 1.11% of gross advances at September 30, 2026, and 0.87% without agricultural loans. A slower economy or bad harvests can raise credit costs.
Balance sheet: HDFC Bank is a bank, so its balance sheet is mostly loans, investments and deposits, and not corporate debt. At September 30, 2026, the standalone balance sheet was ₹45,778 billion. Deposits were ₹33,274 billion, of which current and savings deposits were 31.6%, and borrowings were ₹4,890.2 billion. Net advances were ₹31,955.7 billion, so advances were about 96% of deposits (a calculation from the results). Under Basel III, the total capital adequacy ratio was 18.9%, the Tier 1 ratio was 17.2% and the common equity Tier 1 ratio was 17.1%, against a requirement of 11.9%. Risk-weighted assets were ₹31,793 billion. Gross non-performing assets were 1.11% of gross advances and net non-performing assets were 0.37% of net advances. Consolidated share capital and reserves were ₹6,034.7 billion. In June 2026, the bank sold USD 750 million of senior unsecured bonds, and in September 2026 it called ₹7.39 billion of Additional Tier 1 notes. As of 2026-09-30.
Checkpoints: Jan 16, 2027 (estimate): Q3 fiscal 2027 results: profit growth and margin. Pending. Watch: Profit after tax growth near loan growth with a net interest margin near 3.2% and stable asset quality pass; flat profit or a lower margin fails. Apr 2027 (estimate): Fiscal 2027 results: first year of the new leaders. Pending. Watch: Higher return on equity than in fiscal 2026 and no new governance issue pass; flat returns or a new governance issue fail.
Recent events: 2026-11-09: HDFC Bank told the NYSE that it appointed V. N. Srivatsan as its Chief Compliance Officer. 2026-10-17: HDFC Bank reported Q2 fiscal 2027 results. Standalone profit after tax rose 4.7% to ₹195.1 billion, or about 12.6% without treasury gains, which fell to ₹7.8 billion from ₹23.9 billion. Net interest income rose 9.7% to ₹346.2 billion, and the net interest margin was 3.16% on total assets. Deposits grew 18.8% and gross advances grew 16.3% from a year earlier. Gross non-performing assets fell to 1.11% of gross advances. 2026-10-01: The Reserve Bank of India approved Anup Bagchi as Managing Director and CEO for three years from October 27, 2026. He replaced Sashidhar Jagdishan, who completed his term on October 26, 2026. Bagchi was the MD and CEO of ICICI Prudential Life Insurance and a former Executive Director of ICICI Bank. 2026-07-27: HDFC Bank completed an internal review of a deposit arrangement with the Maharashtra State Road Development Corporation in 2017 and 2021. The board found business overreach, not bad intent or personal gain. It gave warning letters and a penalty of ₹1 lakh each to three senior employees, including the CEO and the CFO, and it reported the matter to the Reserve Bank of India. 2026-07-18: HDFC Bank reported Q1 fiscal 2027 results. Standalone profit after tax was ₹190.6 billion. 2026-07-16: The Reserve Bank of India approved Rajiv Kumar as part-time chairman of HDFC Bank. 2026-06-30: HDFC Bank appointed Puneet Sharma as Chief Financial Officer-designate from September 1, 2026, and as Chief Financial Officer from December 1, 2026. 2026-06-26: External law firms completed their review of the former chairman's resignation letter. They found that his statement was not supported by the board records or the witness interviews. He did not agree to an interview. 2026-04-18: HDFC Bank reported results for the year to March 31, 2026. Standalone profit after tax was ₹746.7 billion. The board recommended a final dividend of ₹13.00 per share, for a total of ₹15.50 per share for the year. 2026-03-18: The part-time chairman, Atanu Chakraborty, resigned and said that some events and practices at the bank were not in line with his personal values and ethics. Keki Mistry became interim chairman. On March 19, 2026, the Reserve Bank of India said that it had no material concerns on record about the bank's conduct or governance.