HDFC Bank (HDFCB IN) – Q2FY26 Result Update – Balance sheet further strengthened – BUY
Published on 19 Oct 2025
HDFCB saw good quarter as core PAT at Rs156.5bn beat PLe by 1.8% even after creating contingent provision, adjusting for which earnings would been higher by 9.2%. Hence asset quality was best-in-class driven by lower gross slippages and higher recoveries that included a lumpy NPA account. This led to reversal in NPA provision of Rs20bn that was utilized to create contingent provision of Rs15bn to further strengthen balance sheet. Buffer provisions are 139bps of net loans vs 93bps for ICICIB while CET-1 is 17.5% (ICICIB 16.35%). Loan growth picked up to 4.5% QoQ mainly led by corporate/SME/agri though it was muted in retail (+1.8%); CC growth was lower to ICICI/AXSB. Due to stronger balance sheet, we raise multiple slightly to 2.5x from 2.4x and increase SOTP based TP to Rs1,150 from Rs1,075 as we roll forward to Sep’27 core ABV. Retain ‘BUY’.
