Axis Securities has issued a BUY rating for HDFC Bank with a target price of Rs 785, reflecting a 10% upside. The brokerage highlights the appointment of Anup Bagchi as MD & CEO as a key catalyst for stability. Investors are watching for progress on deposit growth and CASA ratio recovery, despite near-term margin pressures.
Axis Securities Maintains BUY Rating on HDFC Bank
Target Price: Rs 785 | Current Price: Rs 715
Reader Takeaway: Stability follows leadership appointment; focus remains on improving CASA ratios and expanding retail portfolio margins.
What just happened
Axis Securities has released a research report maintaining a BUY rating on HDFC Bank. The brokerage has set a price target of Rs 785, implying a 10% upside from the current market price. This update follows the recent RBI approval for Mr. Anup Bagchi to take over as MD & CEO for a three-year term starting October 27, 2026.
Why this matters
The appointment of a new MD & CEO removes a significant layer of uncertainty that has surrounded the bank's leadership. With the top-level succession now resolved, analysts expect the management team to pivot entirely toward operational efficiency, specifically targeting retail growth and margin recovery, which have been focus areas since the merger.
Business and Operational Update
Credit growth showed a notable improvement of approximately 5% quarter-on-quarter in Q2 FY27, marking the bank's strongest performance in nine quarters. The bank is currently aiming to shift its retail portfolio mix to 60% over the medium term, up from 52% recorded in June 2026. While CASA ratios have moderated to roughly 31.6% post-merger, management remains committed to restoring this to the 38-40% range through focused branch productivity and customer acquisition strategies.
Risks to watch
- Margin pressure: The report acknowledges that pressure on margins is likely to persist in the near term.
- Deposit replacement: Analysts pointed out that the pace of replacing high-cost borrowings with core deposits remains a key challenge.
- CASA normalization: Investors should be aware that the return to historical CASA levels is expected to be a gradual process rather than an immediate recovery.
What to track next
The primary metrics to monitor will be the bank's ability to drive deposit growth and the subsequent impact on net interest margins. Ongoing execution regarding the integration of new retail customers will be vital for long-term valuation.