HDFC Bank: MF stake hits all-time high in Q3; retail down for 7th quarter; what's ahead?

Mutual funds (MF) stake in HDFC Bank Ltd crossed 26 per cent for the first time ever in the December quarter, while foreign portfolio investors (FPIs) trimmed stake in the most-valued lender to the lowest since June quarter of 2024. Retail investors cut stake in the private bank for the seventh straight quarter, data available with stock exchanges and AceEquity suggests.

In percentage terms, MF owned 26.66 per cent stake in HDFC Bank in the December quarter, up 64 basis points over 26.02 per cent in the September quarter, data showed. MF holding in HDFC Bank breached 20 per cent-level in March 2024 and 25 per cent in March 2025 quarter.
 
FPI ownership in the bank, which stood as high as 52.29 per cent in the December quarter of 2023, came in at 47.67 per cent in the quarter gone by. It was down 45 basis points over 48.37 per cent in the September quarter. This was lowest FPI holding in the bank since June quarter of 2024.   

As per data 35.39 lakh small investors (resident individuals holding nominal share capital up to Rs 2 lakh) owned 9.41 per cent stake in HDFC Bank, down from 9.56 per cent in the previous quarter. Retail holding stood at 12.7 per cent for the quarter ended March 2024. 

LIC owned 4.77 per cent stake in HDFC Bank in Q3 against 4.89 per cent in the September quarter. LIC's holding in HDFC Bank in the preceding three quarters stood at 5.15 per cent, 5.45 per cent and 5.48 per cent, respectively. 
Systematix expects HDFC Bank to report 11.2 per cent YoY rise in net profit at Rs 18,604 crore.

It sees net interest income (NII) for the lender to rise 6.4 per cent YoY to Rs 32,606 crore. The provisional gross advances growth was at 2.7 per cent QoQ, it said adding that the fall in YoY print will  be completely off set by the fall in cost of deposits, and, therefore, net interest margin (NIM) will be marginally higher  sequentially

"Slippages are expected to increase marginally on sequential basis. However, provisions are also expected to be lower sequentially due to one-off higher provision in Q2FY26," it said.

In its Q3 update, HDFC Bank reported modest loan growth of 2.7 per cent QoQ and 9.8 per cent YoY in its gross AUM, compared with 3.1 per cent QoQ and 8.9 per cent YoY in Q2FY26. Net of loan sell-down through interbank participatory certificates, gross loan growth stood at 2.7 per cent QoQ and 11.9 per cent YoY, versus 4.4 per cent QoQ and 9.9 per cent YoY in Q2FY26.

Deposit growth also remained moderate at 2.1 per cent QoQ and 11.5 per cent YoY, compared with 1.4 per cent QoQ and 12.1 per cent YoY in Q2FY26. This was driven by term deposit growth of 2.5 per cent QoQ and 12.3 per cent YoY, along with CASA deposit growth of 1.2 per cent QoQ and 10.1 per cent YoY. The CASA ratio declined 27 basis points QoQ to 33.6 per cent.

"We believe constrained deposit growth has weighed on loan growth this quarter as its CD ratio almost touched 100 per cent mark. Strong deposit mobilisation remains key for the bank to drive acceleration in loan growth going forward. Maintain Buy," Nomura said.

The loan-to-deposit ratio, calculated on the basis of gross loans, rose by around 64 basis points QoQ to 99.5 per cent, following an increase of around 290 basis points QoQ in Q2FY26.