HDFC Bank shares fell over 1% in early trade after the lender reported its March quarter results, even though net profit rose. The market reaction suggests investors were expecting a stronger quarter and clearer signs of faster growth.
India’s largest private lender reported a net profit of about Rs 19,221 crore for the fourth quarter, up around 9% from a year ago.
Profit was helped by lower provisions, which is the money banks set aside for possible bad loans. Asset quality also improved during the quarter.
So why did the stock fall?
The biggest reason appears to be slower growth in core banking income. Net interest income, which is the difference between interest earned on loans and interest paid on deposits, rose just 3% year-on-year to around Rs 33,081 crore.
That was seen as modest for a bank of HDFC Bank’s size.
JM Financial said the quarter showed “mixed operating trends”, pointing to muted growth in core operating profit and lower income momentum, although it added that asset quality remained robust.
Another key factor was loan growth. Advances rose 12.1% from a year ago, while deposits grew faster at 14.4%. That is healthy from a balance-sheet perspective, but some investors were hoping for stronger loan expansion after the HDFC merger integration.
Brokerage firm Equirus said the bank has moved “from constraint to comfort”, meaning earlier balance-sheet pressures are easing. However, it also noted that future earnings may depend more on improving efficiency than rapid balance-sheet growth.
There was also caution in management commentary. According to brokerage notes, HDFC Bank did not repeat its earlier view of growing loans faster than the industry in FY27.
Instead, it said it would focus on lending opportunities based on risk and returns. Investors often read cautious guidance as a sign that near-term growth could stay moderate.
The good news is that most brokerages remain positive on the stock. Motilal Oswal retained a “Buy” rating with a target price of Rs 1,100, saying business growth is gaining momentum. Equirus kept a “Long” rating with a target price of Rs 1,160, while JM Financial maintained “Add” with a target of Rs 890.
For retail investors, the takeaway is pretty straightforward. HDFC Bank delivered a stable quarter, not a weak one. But the market now wants stronger growth, better margins and faster post-merger progress.
