Jefferies bullish on HDFC Bank, expects big upside; Here’s the target price and key details

Global brokerage Jefferies has reaffirmed its ‘Buy’ rating on HDFC Bank, calling it its top banking pick with a target price of Rs 1,200 per share. The brokerage said improving loan growth, stable asset quality and operational efficiencies are expected to lift earnings and valuations. The ADR target price is maintained at $92.

Jefferies Bullish on HDFC Bank’s Loan Growth

Jefferies said HDFC Bank’s management expects the recent GST rate cuts and earlier income tax reductions to revive demand that had been subdued in anticipation of these policy changes. The bank also reported stable salary credit and demand trends across other sectors.

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“Management feels that competitive intensity from PSU banks has eased slightly, with the gap between private and PSU banks’ mortgage rates narrowing from about 50 basis points to 30–40 basis points,” Jefferies noted.

HDFC Bank Share Price Target

In its base case, Jefferies assigns the core bank a P/ABV of 2.5x Sep-27E and sets a target price of Rs 1,200 per share. The upside scenario pegs the target at Rs 1,270, while the downside scenario sets it at Rs 880.

Asset Quality Remains Stable

HDFC Bank’s management expressed confidence in asset quality trends across retail lending, unsecured loans, credit cards and SME portfolios, while also signalling limited impact from US tariffs on Indian exporters financed by the bank or the broader sector.

Jefferies forecasts loan growth at a 12 per cent CAGR over FY25–28E, with net interest margins (NIMs) averaging 3.4 per cent. Gross NPAs and net NPAs are projected at 1.3 per cent and 0.5 per cent, respectively, by FY26E.

Efficiency Gains and Merger Synergies to Drive Valuation

A lower cost-to-income ratio could become a key theme for HDFC Bank from FY27 as operational efficiencies kick in. According to Jefferies, branches opened during FY22–23 (19 per cent of total) are expected to break even by FY27, while new technology platforms will streamline processes and reduce manpower requirements.

Jefferies added that synergies from the merger with HDFC Ltd will create cross-selling opportunities, enhance service offerings and improve operational efficiency, strengthening the bank’s deposit franchise and retail asset base.

Valuation and Target Price Scenarios

In its base case, Jefferies assigns the core bank a P/ABV of 2.5x Sep-27E and sets a target price of Rs 1,200 per share. The upside scenario pegs the target at Rs 1,270, while the downside scenario sets it at Rs 880.