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You can't really fault HDFC Bank's numbers. The Q4 FY25 report ticked most boxes—steady profits, controlled NPAs (non-performing assets), decent loan growth. But if the bank is performing so well, why does the market seem only mildly impressed?
Because HDFC Bank—like it or not—is in transition. Post-merger with HDFC, it's no longer just a retail lending powerhouse. It's now grappling with a much larger balance sheet, tighter margins and most importantly, a deposit engine that needs oiling.
Investors expecting the pre-merger pace may need a reset.
HDFC Bank Q4 numbers look good, mostly
The bank reported a 6.7 per cent YoY rise in net profit to Rs 17,622 crore, while net interest income (NII) climbed 10.3 per cent to Rs 32,070 crore. Asset quality improved, too—gross NPAs declined to 1.33 per cent from 1.42 per cent last quarter.
Margins held up, too. It reported a net interest margin (NIM) was 3.54 per cent on total assets. But a chunk of the quarter's earnings came from a one-off income tax refund. Strip that out, and the core NIM comes closer to 3.46 per cent, a number that isn't exciting for a growth-focused bank.
Deposit growth: The real pressure point
Post-merger, HDFC Bank's loan book ballooned—but its deposits didn't rise in sync. As of March 2025, the bank's loan-to-deposit ratio (LDR) sits at 96.5 per cent. Compare that to the pre-merger comfort zone of 85-90 per cent, and you see why the bank is trying to play catch-up.
Until deposits stabilise, HDFC Bank is walking a tightrope between growth and profitability.
The market is watching—and waiting
The stock has rebounded from its January lows and touched a record high of Rs 1,950 today. But let's not forget: in the months right after the merger, the stock underperformed the broader banking index.
Why? Because the Street was hoping the merger would be immediately accretive. Instead, it brought margin pressure, integration complexity and dilution in return ratios.
Brokerages like Jefferies still have a buy call and have raised their target to Rs 2,340. But this call hinges on execution—better deposit growth, improving margins, and no credit surprises. Tall order?
Value Research Online Ratings
Value Research Stock Rating gives HDFC Bank an overall rating of 5 stars. The company's specific scores are as follows:
- Quality Score: 9/10
- Growth Score: 7/10
- Valuation Score: 6/10
- Momentum Score: 9/10
So, is it a buy now?
That depends on what you're expecting.
HDFC Bank is doing a lot of things right. If you're looking for a safe, large-cap bank with predictable earnings, solid governance and long-term tailwinds—HDFC Bank still fits the bill. But if you're expecting fast re-rating or the kind of wealth creation it offered in the 2010s, you may be disappointed. The deposit engine needs tuning. Margins need protection. And investor patience may need a refill.
Compare HDFC Bank's deposit and margin metrics using our Stock Screener.
Download the Stock Card for a quick snapshot of the bank's key ratios and peer comparison.
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