HDFC Bank shares: Buy, hold or sell? Bear case scenario in the price, says UBS
UBS said 42 per cent of HDFC Bank's branches are less than five years old against 5-30 per cent for other large banks, which should drive improved productivity as the branches mature.
- Sep 21, 2026,
- Updated Sep 21, 2026 8:22 AM IST
UBS in its latest note on HDFC Bank Ltd said the private lender's leadership issues are likely to be resolved in the coming weeks after submission of names to the RBI for CEO. Some of the bear case scenarios around leadership are in the price, the foreign brokerage said as it added HDFC Bank to its UBS APAC Key call list. UBS suggested 'Buy' on HDFC Bank with a target of Rs 1,000, implying 37 per cent potential upside.
"We believe resolution of leadership uncertainty should drive a re-rating in the near term and the focus of investors is likely to shift back to fundamentals. We believe the market is under- appreciating the strong branch expansion by the company over the last 3-4 years which should support strong deposit growth ahead of peers," UBS said.
The foreign brokerage noted that 42 per cent of HDFC Bank's branches are less than five years old against 5-30 per cent for other large banks, which should drive improved productivity as the branches mature.
"We saw early signs of a recovery in loan growth (15.6 per cent in Q1FY27) and expect deposit growth to remain healthy, supported by RBI measures and improved liquidity. We thus expect loan growth to improve towards 15 per cent over FY27-29E and expect margins to improve towards 3.5 per cent, driven by faster growth in high-yielding retail loans. We expect RoA to improve to 1.9 per cent in FY27/28E," UBS said.
The foreign brokerage finds risk-reward for HDFC Bank favourable at 1.4 times estimated FY28 book value, as UBS felt business growth and NIM trends are key signposts for a potential stock re-rating. The timely management succession would be a near-term factor to watch, it said.
Detailed branch-level work gives confidence on deposit outperformance HDFC Bank is expanding deeper into semi-urban locations with industry-leading additions in the last three years.
"Despite stronger additions HDFC remains leader in per-branch deposits (total as well as CASA) which shows strength of its franchise. We expect branch productivity to keep improving and aiding overall deposit growth. We forecast 15.5 per cent deposits CAGR over FY26-28E. Margins could recover cyclically from here," UBS said.
UBS in its latest note on HDFC Bank Ltd said the private lender's leadership issues are likely to be resolved in the coming weeks after submission of names to the RBI for CEO. Some of the bear case scenarios around leadership are in the price, the foreign brokerage said as it added HDFC Bank to its UBS APAC Key call list. UBS suggested 'Buy' on HDFC Bank with a target of Rs 1,000, implying 37 per cent potential upside.
"We believe resolution of leadership uncertainty should drive a re-rating in the near term and the focus of investors is likely to shift back to fundamentals. We believe the market is under- appreciating the strong branch expansion by the company over the last 3-4 years which should support strong deposit growth ahead of peers," UBS said.
The foreign brokerage noted that 42 per cent of HDFC Bank's branches are less than five years old against 5-30 per cent for other large banks, which should drive improved productivity as the branches mature.
"We saw early signs of a recovery in loan growth (15.6 per cent in Q1FY27) and expect deposit growth to remain healthy, supported by RBI measures and improved liquidity. We thus expect loan growth to improve towards 15 per cent over FY27-29E and expect margins to improve towards 3.5 per cent, driven by faster growth in high-yielding retail loans. We expect RoA to improve to 1.9 per cent in FY27/28E," UBS said.
The foreign brokerage finds risk-reward for HDFC Bank favourable at 1.4 times estimated FY28 book value, as UBS felt business growth and NIM trends are key signposts for a potential stock re-rating. The timely management succession would be a near-term factor to watch, it said.
Detailed branch-level work gives confidence on deposit outperformance HDFC Bank is expanding deeper into semi-urban locations with industry-leading additions in the last three years.
"Despite stronger additions HDFC remains leader in per-branch deposits (total as well as CASA) which shows strength of its franchise. We expect branch productivity to keep improving and aiding overall deposit growth. We forecast 15.5 per cent deposits CAGR over FY26-28E. Margins could recover cyclically from here," UBS said.