HDFC Bank shares have climbed more than 4% this month, putting the stock on track to break a two-month losing streak while the Sensex heads for its second straight monthly decline. The benchmark index fell nearly 3% in September even as the bank’s stock rose 1.49% on 21 September to close at ₹740, making it the largest positive contributor to the Sensex’s 0.76% gain that day.
The numbers behind the bounce
The rebound follows a 52-week low of ₹682 hit on 11 September. At ₹740 the stock sits 27.5% below its one-year peak of ₹1,020.35 reached on 23 October 2025. The longer-term record is bleaker: BSE data show declines of 4.5% over five years, 4.7% over three, 15% over two, 23.5% over one, and 25.3% year-to-date.
Why the stock has lagged
Analysts attribute the underperformance to three persistent worries: the sluggish normalisation of the loan-to-deposit ratio after the HDFC merger, near-term net interest margin compression, and uncertainty around the leadership transition. Those concerns have weighed on earnings and sentiment even as asset quality and profitability have held up.
What institutions are doing
Domestic institutions held 41.92% of the bank at the end of the June quarter of FY27, while foreign portfolio investors held 41.83%. In August the Reserve Bank of India approved Life Insurance Corporation of India to acquire up to 9.99% of the bank, a move that underscores continued institutional conviction.
The valuation case
The stock trades at roughly 2.5 times book value against a reported return on equity of 13.6%, a meaningful discount to its historical range. On a price-to-earnings basis it changes hands at about 14 times, below ICICI Bank at 16 times and Kotak Mahindra Bank at 20 times, and in line with Axis Bank at 14 times.
Technical view and targets
Ajit Mishra of Religare Broking recommends the stock for long-term investors, arguing most negatives are priced in, but cautions against expecting a sharp reversal. He sees a medium-term target band of ₹760-800 and says a sustained recovery would require the stock to hold above that range alongside improving fundamentals. Vinit Bolinjkar of Ventura favours accumulation for a 12-18 month horizon, citing deposit mobilisation, CASA recovery and NIM stabilisation. Jigar S. Patel of Anand Rathi notes a bullish divergence on the weekly relative strength index.