HDFC Bank shares trade at discount to ICICI Bank. Should you buy stock post Q4 results?

Unlike the previous two quarters when there were several negative outcomes on earnings or the balance sheet, analysts noted that HDFC Bank's performance in th March quarter was comfortable on most metrics. They believe the stock valuations are inexpensive.

Antique Stock Broking said the core performance was a tad better than estimates but, as net interest margin (NIM) can be under pressure in the near term, it cut its FY25 earnings estimates by 2.5 per cent. The brokerage largely maintained its FY26 earnings estimates. This brokerage has a 'Buy' rating on HDFC Bank with a target of Rs 1,850.

Kotak Institutional Equities said it would prefer to be a bit cautious than extrapolate the March quarter. The path to normalisation of several metrics is unlikely to be a straightforward one, it said.

"We are likely to see quarters where the expectations are running ahead of execution, especially on the two key variables, i.e., deposits and NIM progression," it said.

Kotak however maintained 'Buy' with fair value of Rs 1,750, saying the stock is inexpensive at these levels, as it does believe that the medium-term outlook on the business looks extremely comfortable and a 15 per cent growth compounded annually is likely.

Nirmal Bang said it is positive on HDFC Bank from a long-term perspective due to its high growth potential amid good capital position, merger synergies in the long term and best-in-class asset quality. In the near term, though business growth and NIMs will be the key monitorables, it said while suggesting a target of Rs 2,026.

Nuvama suggested a target of Rs 1,760. While it sees long-term franchise value, it believes the short-term price performance would be driven by the consistency of quarterly earnings. It expects volatility in quarterly earnings would persist for some time.

HDFC Bank vs ICICI Bank

"On a relative basis, the risk reward is still not compelling, even as HDFC Bank trades at a discount to ICICI Bank. We would prefer for a wider discount, as the current relative valuation does not give any headroom for disappointment in execution, which is not the best outcome," Kotak said.