Leadership change could improve execution
Jefferies expects the appointment of a new CEO to be followed by changes to the top team and business structures. The brokerage believes completing this reorganisation promptly could allow the bank to focus more clearly on execution, including improving deposit growth, fee income and the composition of its loan book.HDFC Bank has lagged peers in retail deposit growth, with retail LCR deposits growing 12% compared with 15% for ICICI Bank and 14% for SBI. However, its FCNR-B deposits have made a strong comeback, with the bank mobilising $11-12 billion in two months. Jefferies estimates this represents around 8-9% market share and could help refinance some high-cost deposits and borrowings at slightly lower rates.
Fees, loan mix key to earnings momentum
Fee growth is another area where Jefferies sees room for improvement. Growth slowed to 8% and 11% year-on-year in the past two quarters, weighed down by slower credit-card fees, third-party product income and retail liabilities. The brokerage said a recovery in fee growth could support the bank's return on assets.Also read: How Gautam Adani turned ₹1 lakh crore of stressed asset deals into a mega infrastructure bet
Bancassurance remains another factor to watch. Jefferies estimates bancassurance fees accounted for 8% of HDFC Bank's FY27 normalised pre-tax profit, meaning a 30% impact on this income stream could translate into a 2% hit to profit.
On the loan side, corporate and secured lending have been growing faster, while the share of PSU loans has increased. Jefferies said lower loan repricing and the bank's exposure to floating-rate loans have weighed on net interest margins. A shift towards SME and business banking, gold loans and unsecured personal loans could support returns.
Jefferies sees scope for rerating
The brokerage said HDFC Bank's valuation gap with peers has been disrupted since March 18, 2026. Greater clarity on CEO succession, team reorganisation and execution could help address that gap.Also read:Rs 6 lakh cr rout! 6 key triggers behind today's market meltdown
Jefferies values the bank at Rs 880, based on 1.6 times September 2028 adjusted book value, and maintains its Buy rating.
HDFC Bank shares were trading at Rs 723.05, down 1.73% on Monday morning. The stock has declined 2.24% over the past week and 23.50% over the past year.
Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
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