HDFC Bank Shares Slip After Q4 Results Despite Profit Beat: Is the Dip Worth Watching?
- 20th April 2026
- 12:00 PM
- 3 min read
Summary
HDFC Bank reported a 9.1% year-on-year rise in net profit to INR 19,221 crore in Q4FY26, supported by lower provisions and operating costs. Net interest income and core pre-provision profit missed estimates. Deposit growth was a standout at 8.6% quarter-on-quarter. Analysts maintain a constructive view on the stock's medium-term outlook.Mumbai | 20 April 2026
HDFC Bank posted a profit beat in Q4FY26, but weakness in core income pulled the stock lower in early trade. Shares were trading near INR 800 on Monday as investors assessed the results.
H2: What Were HDFC Bank’s Q4FY26 Results?
Reported net profit for Q4FY26 was INR 19,221 crore, up 9.1% year-on-year. Core profit after tax was INR 17,320 crore, missing PL Capital Research estimates by 4.9%. Lower provisions and operating costs supported the headline figure.
Net interest income was INR 33,080 crore, below the PL Capital estimate of INR 34,400 crore. Reported net interest margin improved to 3.53% from 3.51% in Q3FY26. Other income was INR 13,200 crore, a 3.8% miss on fees. Operating expenses were 0.7% lower at INR 18,480 crore. Core pre-provision operating profit was INR 25,310 crore, a 6% miss.
Loan growth was 12.1% year-on-year and 4.1% quarter-on-quarter, led by corporate (5.1% QoQ), small and mid-market (5.3%), and agriculture (5.3%). Retail loan growth was 2.3% QoQ.
H2: Why Did Core Income Fall Short?
Back-ended loan growth was the primary driver of the NII miss. Investment yields of HDFC Bank fell 47 basis points quarter-on-quarter due to a change in portfolio mix, weighing directly on net interest income.
Fee income was muted, reflecting lower volumes, an unfavourable product mix, and a shift in customer preferences towards lower-margin products. PL Capital Research has trimmed net interest margin estimates for FY27 and FY28 by 10 basis points each, to approximately 3.4%, and cut fee estimates for both years by approximately 3.5%.
H2: How Did Deposits and Asset Quality Perform?
Deposits were the standout of the quarter. Total deposits rose 8.6% quarter-on-quarter and 14.4% year-on-year, driven by a focus on granular retail deposits. Term deposits below INR 30 mn constituted 47% of incremental inflows. CASA improved to 34.1% from 33.6% in Q3FY26. The loan-to-deposit ratio fell to 94.6% from 98.7%.
Asset quality improved across the board. Gross non-performing assets came in at 1.15%, better than the estimate of 1.2%. Gross slippages were INR 6,200 crore against an estimate of INR 7,480 crore. Recoveries came in at INR 4,600 crore, ahead of the INR 4,130 crore estimate. Provisions fell to INR 2,610 crore from an estimated INR 2,940 crore.
Post-merger, liability penetration in home loans improved from 36% to 50%, with 60 to 65% of customers now routing EMIs through HDFC Bank accounts.
H2: What Is the Outlook for HDFC Bank?
Analysts at PL Capital Research have trimmed their earnings estimates, citing the NIM miss and softer fees. Core profit after tax forecasts for FY27 and FY28 have been cut by an average of 3%.
On growth, the team expects loans and deposits to compound at 12% and 13% annually over FY26-28. That trajectory implies the bank will need to mobilise INR 4 to 4.5 lakh crore in fresh deposits over the period.
The valuation multiple has been pulled back to 2.2x from 2.5x on FY28 core adjusted book value, with the target price revised to INR 1,100 from INR 1,150. Deposit accretion and the liquidity coverage ratio are flagged as the numbers to watch.
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