HDFC Bank's recent Q1FY26 results, coupled with the announcement of its first-ever bonus issue and a special interim dividend, are likely to influence the stock's performance. The question for investors now is whether these developments signal a buying opportunity.
Q1FY26 Performance:
HDFC Bank reported a 12% year-on-year (YoY) increase in its standalone net profit, reaching ₹18,155 crore, compared to ₹16,175 crore in the same period last year. The bank's net interest income (NII), the difference between interest earned and interest expended, rose by 5.4% YoY to ₹31,440 crore. Total interest income for the quarter increased by 6% year-on-year to ₹77,470 crore.
However, the bank's core net interest margin (NIM) was 3.35% on total assets, slightly lower than the 3.46% in the previous quarter. This reflects the faster repricing of assets compared to deposits. Operating expenses for the quarter rose to ₹17,430 crore from ₹16,620 crore a year earlier, and the cost-to-income ratio, excluding transaction gains, stood at 39.6% during the period. Provisions and contingencies for the quarter stood at ₹14,440 crore, including floating provisions of ₹9,000 crore.
The bank's gross advances grew by 6.7% YoY to ₹26.53 lakh crore. Deposits experienced a robust 16.2% YoY growth, reaching ₹27.64 lakh crore. CASA deposits also saw an increase of 8.5% YoY, totaling ₹9.3 lakh crore.
Bonus Issue and Dividend:
HDFC Bank announced its first-ever bonus issue in a 1:1 ratio, meaning shareholders will receive one additional share for each share they hold. The record date for determining eligibility for the bonus shares is August 27, 2025. Additionally, the board approved a special interim dividend of ₹5 per share for the financial year 2025-26. The record date for the dividend is July 25, 2025, and the dividend will be paid on August 11, 2025.
Market Reaction and Analyst Views:
The market's reaction to these announcements is likely to be influenced by several factors. The bonus issue could improve the stock's liquidity and make it more attractive to retail investors. The special dividend provides an immediate return to shareholders.
However, analysts are also focusing on the bank's net interest margins and asset quality. While the net profit showed a healthy increase, the slight dip in NIM and the rise in gross non-performing assets (NPAs) to 1.4% may temper enthusiasm. Some experts suggest that the market is waiting for signs of improvement in these key metrics before significantly revaluing the stock.
Stock Forecasts and Investment Decision:
Various analysts offer differing perspectives on HDFC Bank's stock. According to one forecast, HDFC Bank Limited shares are expected to rise by 6.56% and reach $80.33 per share by August 16, 2025. Another source predicts that the stock price may reach ₹2,123.09 by the end of 2025. Walletinvestor.com predicts a long-term increase, with the stock price potentially reaching ₹2,485.873 by 2030. HDFC Bank share price will see major support at 1,952.57 for the week.
However, it's important to note that these are just predictions, and the actual performance of the stock may vary. Investors should consider their own risk tolerance, investment horizon, and conduct thorough due diligence before making any investment decisions.
Disclaimer: This analysis is for informational purposes only and should not be considered investment advice.
