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Informist, Thursday, Jul. 16, 2026

 

By Kabir Sharma

 

MUMBAI – HDFC Bank Ltd. is expected to report solid growth in net interest income for the June quarter, supported by healthy growth in loans and deposits. Analysts, however, remain sharply divided on the lender's profitability as margin pressures and provisioning assumptions continue to weigh on the earnings estimates.

 

The average of estimates from 14 brokerages pegs the country's largest private-sector lender's standalone net profit for the June quarter at INR 196.87 billion, up 8% on year. The bank's net interest income for the quarter is estimated at INR 342.46 billion, up 9% on year. HDFC Bank's net profit for the March quarter had risen 9% on year to INR 192.21 billion as provisions fell 18% on year.

 

What stands out this time is the unusually wide dispersion in profit estimates. The highest net profit estimate is INR 262.40 billion from PhillipCapital (India) Pvt. Ltd. and the lowest is INR 166.90 billion from Prabhudas Lilladher Pvt. Ltd., implying a staggering difference of INR 95.50 billion, or nearly half of the consensus estimate. Such a wide gap underscores the uncertainty around key variables such as treasury income, provisioning requirements, operating expenses, and margin trajectory, despite broadly similar expectations on business growth.

 

By comparison, estimates for net interest income are more tightly clustered. The highest estimate for the bank's net interest income is INR 350.4 billion from IDBI Capital Market Services Ltd. and the lowest is INR 335.8 billion from Nomura Equity Research. The bank had reported a net interest income of INR 330.82 billion for the March quarter, up 3% on year and 1% on quarter.

 

The earnings will be closely watched after HDFC Bank's provisional business update showed continued momentum in advances and deposits. Gross advances rose around 15% on year and 3% sequentially during the quarter. Deposits also grew about 15% from the year-ago period. The bank's credit-deposit ratio, a continuous cause for concern, rose further to around 96.5%.

 

The primary focus for investors, however, is unlikely to be loan growth alone. Analysts will be focusing on the management's commentary on the trajectory of net interest margin, loan-to-deposit ratio normalisation, mobilisation of foreign currency non-resident bank deposits, the trend of asset quality, and the effects of the Reserve Bank of India's interest rate easing cycle on lending spreads. Most brokerages expect the bank's margins to remain under pressure, although the extent of the decline differs. IDBI Capital expects the net interest income to grow 11.5% year-on-year and 6% sequentially, aided by re-acceleration in credit growth and margin normalisation. JM Financial Institutional Securities Pvt. Ltd. expects the net interest margin to contract by 2-3 basis points sequentially despite healthy liability mobilisation. The brokerage noted that deposit growth remained among the strongest in the large private-sector banking space. Nomura also expects margins to decline, citing pressure from rising funding costs and changes in the deposit mix. Apart from earnings, it expects investors to closely monitor the management's comments on leadership continuity and opportunities to mobilise foreign currency non-resident deposits.

 

Motilal Oswal Financial Services Ltd. expects loan growth of 14.5% on year and 2.4% on quarter, driven primarily by corporate lending, business banking, agriculture, and gold loans, while mortgage growth is likely to lag. It expects operating costs to remain under control because of operating leverage, while margins are likely to remain broadly stable with only a marginal decline of around 2 bps, partly due to interest reversals on seasonal agricultural stress. Asset quality is expected to remain stable, with credit costs in the 45-50 bps range. Dolat Capital Market Pvt. Ltd. also expects credit costs of around 45 bps while projecting a net interest margin of 3.41% during the quarter.

 

Kotak Institutional Equities expects margins to remain broadly stable despite slower-than-expected improvement in profitability. The brokerage noted that disclosed loan growth remains slightly below the industry average while deposits continue to expand at a healthy pace. It expects gross non-performing assets to remain stable with slippages at around 1.3% of loans, although it believes an improvement in net interest margin could take longer than earlier anticipated. It also expects investors to seek updates on FCNR(B) deposit mobilisation.

 

Prabhudas Lilladher is among the more optimistic brokerages on margins. It expects loan growth of 3.4% sequentially, net interest income growth of 2.9% sequentially, and a 4 bp expansion in net interest margin to 3.43%. Despite expecting margin expansion, it has the lowest profit estimate among all brokerages at INR 166.90 billion, indicating that it is building in significantly higher provisioning or other non-operating pressures than peers. The bank's net interest margin was compressed to 3.38% in the March quarter from 3.40% in the December quarter.

 

Systematix Shares and Stocks (India) Ltd. expects fee income to soften sequentially because of seasonal factors but expects operating expenses to remain well contained. Although slippages and provisions could rise slightly from the previous quarter, the brokerage believes provisions will decline sharply on a year-on-year basis because the base quarter included one-time floating and contingency provisions. HDFC Bank's slippages improved to INR 62 billion in the March quarter from INR 86 billion in the December quarter, taking recoveries to INR 46 billion from INR 45 billion in the trailing quarter. 

 

LEADERSHIP CHANGES

This will be the first set of earnings for newly appointed part-time Chairman Rajiv Kumar, former chief election commissioner of India and former Union finance secretary. Kumar replaced Keki Mistry, who was appointed interim part-time chairman after Atanu Chakraborty resigned.

 

Chakraborty had resigned at the end of March saying "certain practices and happenings within the bank" over the past two years had not been in congruence with his personal "values and ethics". He had also confirmed that there were no other material reasons for his resignation. Chakraborty had joined HDFC Bank's board in 2021.

 

After a review conducted by external law firms Wilson Sonsini Goodrich & Rosati and Wadia Ghandy & Co., the bank said the firms had found no evidence to substantiate the concerns raised by Chakraborty. Chakraborty said the independent legal report was "superfluous" and compliance-related matters had already been addressed during his tenure. His comments came after the bank received a clean chit late last month from the external law firms on the allegations made by Chakraborty.

 

HDFC Bank will detail its June quarter earnings Saturday. Beyond the headline earnings numbers, investors are likely to focus on whether the management sees scope for further improvement in the loan-to-deposit ratio, the sustainability of deposit mobilisation, the outlook for margins after recent policy rate cuts, and the potential contribution of FCNR(B) deposits to funding costs. Commentary on asset quality, particularly slippages and credit costs across retail and corporate portfolios, will also be key.

 

Thursday, HDFC Bank's shares closed at INR 808.30 apiece on the National Stock Exchange, down 0.9% from Wednesday. The stock has risen just over 1% since the bank reported its March quarter earnings on Apr. 18. However, it is down nearly 20% from its 52-week high of INR 1,020.50, recorded on Oct. 23.

 

All 18 research reports on HDFC Bank available with Informist have a "buy" recommendation on the stock with an average target price of INR 1,574, around 95% higher than Thursday's closing price.

 

Following are the Apr-Jun earnings estimates for HDFC Bank from 14 brokerages in INR billion, in descending order of the net profit estimate:

 

Brokerage	Net Interest Income	Net Profit
PhillipCapital (India) Pvt. Ltd.	342.60	262.40
IDBI Capital Market Services Ltd.	350.40	201.50
Nuvama Wealth Management Ltd.	345.10	199.60
Systematix Shares and Stocks (India) Ltd.	343.40	198.00
Kotak Securities Ltd.	343.80	196.90
Anand Rathi Share and Stock Brokers Ltd.	339.37	194.20
SMIFS Ltd.	343.00	194.00
Elara Securities (India) Pvt. Ltd.	340.10	192.50
Motilal Oswal Financial Services Ltd.	341.00	192.30
Dolat Capital Market Pvt. Ltd.	345.40	191.80
YES Securities (India) Ltd.	339.10	190.30
JM Financial Institutional Securities Pvt. Ltd.	345.10	187.90
Nomura Equity Research	335.80	187.80
Prabhudas Lilladher Pvt. Ltd.	340.40	166.90
Average	342.46	196.87

 

End

 

Edited by Shubhayan Bhattacharya

 

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