Motilal Oswal has reaffirmed its positive stance on HDFC Bank with a price target of ₹1,100, citing strong loan growth of 12.1% in FY26. The bank's improved asset-liability management and focus on digital integration are key factors behind the outlook. Investors may track the bank's ability to lower funding costs and improve operating margins as it scales its branch network.
Motilal Oswal has maintained its positive outlook on HDFC Bank, reiterating a target price of ₹1,100 per share. This assessment follows the bank's performance in the 2026 fiscal year, where it reported a 12.1% growth in its loan book. The brokerage highlights the bank's strategic focus on sustainable, profitable expansion as the primary driver for its long-term growth expectations.
Asset-Liability Management and Funding Costs
A central theme in the recent assessment is the improvement in HDFC Bank’s asset-liability management. In FY26, the bank successfully brought its credit-to-deposit ratio down to 94.6%, compared to 96.5% in the previous year. This metric is important for investors as it indicates a more balanced approach to managing the money lent out versus the deposits collected. Furthermore, the bank has significantly reduced its reliance on wholesale borrowings. These borrowings fell to 11% of the total balance sheet by March 2026, down from an 18% peak following the merger. Projections suggest this could further decline to 8% by FY28, a shift that could help the bank manage its funding costs more effectively and support stable profit margins.
Strategic Growth Drivers and Digital Integration
The bank continues to invest in expanding its physical network and upgrading its digital platforms. Growth in the small and mid-market lending segments reached 17% year-on-year, while the bank maintained a cautious stance on unsecured lending. Looking ahead, the institution is focusing on improving its operating leverage—a term for how effectively the bank can increase revenue without a proportional rise in operating expenses. This is expected to be achieved through the higher utilization of branches opened in recent years and the integration of artificial intelligence into core banking operations, such as customer service and cross-selling.
Financial Projections for FY28
Motilal Oswal projects that HDFC Bank will achieve a loan compound annual growth rate of 14.1% through FY28, with earnings projected to grow at a similar rate of 14.2%. The brokerage estimates the bank’s return on assets at 1.9% and return on equity at 14.9% by FY28. The valuation of ₹1,100 per share is based on 2.2 times the estimated book value for FY28, with an additional value assigned to its subsidiaries. The bank’s ability to successfully execute these digital and operational strategies, while maintaining deposit growth in a competitive environment, will be the primary monitorable for investors in the coming quarters.