Check Before You Invest : HDFC Bank Ltd

Q: Which industry/sub-sector does HDFC Bank Ltd belong to?

HDFC Bank Ltd belongs to the BFSI sector, operating specifically within the Bank - Private segment.

Q: Is HDFC Bank Ltd a good quality company?

HDFC Bank Ltd is a good quality company, based on a consistently good multi-year financial track record. This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q: Is HDFC Bank Ltd undervalued or overvalued?

HDFC Bank Ltd appears Undervalued, as its key valuation ratios are lower than their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 15.37, Historic Median: 20.57. Price to Book, Current: 2.01, Historic Median: 2.84. Price to Sales, Current: 3.35, Historic Median: 4.42. EV to EBITDA, Current: 12.88, Historic Median: 15.65

Q: Is HDFC Bank Ltd a good buy now?

HDFC Bank Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Q: Total Income growth of HDFC Bank Ltd?

HDFC Bank Ltd Total Income growth is 15.42% for FY-2025, which is below its 5-year CAGR of 26.21%, indicating slower growth.

Q: Return on Assets of HDFC Bank Ltd?

HDFC Bank Ltd Return on Asset is 1.7%, which is below its 5-year historical median of 2%, indicating deteriorated earnings on assets. Efficiency & Key Metrics. NIM (%), Current: 3.66, Historic Median: 3.82. PPOP (%), Current: 8.86, Historic Median: 11.58. RoA (%), Current: 1.7, Historic Median: 2

Q: Return on Equity (ROE) of HDFC Bank Ltd?

HDFC Bank Ltd Return on Equity is 15.1% for FY-2025, which is below its 5-year historical median of 16.7%, indicating the business is making worse use of its shareholders capital.

Q: Pre-provisioning operating profit margin of HDFC Bank Ltd?

HDFC Bank Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 8.86% for FY-2025, which is below its 5-year median(11.58%), indicating decreasing margins.

Q: Net Interest Margin of HDFC Bank Ltd?

HDFC Bank Ltd Net Interest Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 3.66% for FY-2025, which is in line with its 5-year median( 3.82%), indicating stable margins.

Q: Does its ROIC exceed its WACC?

HDFC Bank Ltd return on invested capital (ROIC) is 17.04% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value creation.

Check Before You Invest : HDFC Bank Ltd

BSE: 500180 NSE: HDFCBANK ISIN: INE040A01034

| Sector: BFSI | Industry: Bank - Private

Snapshot

Q.1 Which industry/sub-sector does HDFC Bank Ltd belong to?

HDFC Bank Ltd belongs to the BFSI sector, operating specifically within the Bank - Private segment.

Q.2 Is HDFC Bank Ltd a good quality company?

HDFC Bank Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is HDFC Bank Ltd undervalued or overvalued?

HDFC Bank Ltd appears Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	15.37	20.57
Price to Book	2.01	2.84
Price to Sales	3.35	4.42
EV to EBITDA	12.88	15.65

Q.4 Is HDFC Bank Ltd a good buy now?

HDFC Bank Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Total Income growth, NIM, PPOP, RoA and RoE compared to its last 5-year median.
How efficiently has it grown and managed operations?
By checking its Total Asset growth and Cost-to-Income ratio.
How strong is its Capital position and Asset Quality?
By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of HDFC Bank Ltd?

HDFC Bank Ltd Total Income growth is 15.42% for FY-2025, which is below its 5-year CAGR of 26.21%, indicating slower growth.

Q.2 Return on Assets of HDFC Bank Ltd?

HDFC Bank Ltd Return on Asset is 1.7%, which is below its 5-year historical median of 2%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NIM (%)	3.66	3.82
PPOP (%)	8.86	11.58
RoA (%)	1.7	2

Q.3 Return on Equity (ROE) of HDFC Bank Ltd?

HDFC Bank Ltd Return on Equity is 15.1% for FY-2025, which is below its 5-year historical median of 16.7%, indicating the business is making worse use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of HDFC Bank Ltd?

HDFC Bank Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 8.86% for FY-2025, which is below its 5-year median(11.58%), indicating decreasing margins.

Q.5 Net Interest Margin of HDFC Bank Ltd?

HDFC Bank Ltd Net Interest Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 3.66% for FY-2025, which is in line with its 5-year median( 3.82%), indicating stable margins.

Q.6 Does its ROIC exceed its WACC?

HDFC Bank Ltd return on invested capital (ROIC) is 17.04% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value creation.

B: Does the bank grow efficiently and manage its operating costs?

Q.7 Total Asset growth of HDFC Bank Ltd?

HDFC Bank Ltd Total Asset growth is 8.99% for FY-2025, which is below its 5-year CAGR of 22.68%, indicating slower growth.

Q.8 Cost to Income ratio of HDFC Bank Ltd?

HDFC Bank Ltd Cost to Income ratio which represents the cost incurred for every Rs.100 earned is 61.5% for FY-2025, is higher its historical 5-year median of 40.6%, indicating improved cost management.

C: How strong is the bank’s capital position and asset quality?

Q.9 Capital Adequacy ratio of HDFC Bank Ltd?

HDFC Bank Ltd Capital Adequacy ratio (CAR) is 19.55% for FY-2025, which is above the regulatory requirement of 12%, indicating strong capital position.

Q.10 Asset Quality of HDFC Bank Ltd?

HDFC Bank Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 1.33% for FY-2025, which is above its 5-year median 1.24%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.43% which is above its 5-year median( 0.33%), indicating deteriorating asset quality.

Ownership & governance

D: Promoter shareholding and pledge status of HDFC Bank Ltd?

Q.1 Promoter shareholding and pledge status of HDFC Bank Ltd?

Promoters hold 0.00% of the HDFC Bank Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does HDFC Bank Ltd performance compare with that of its Peers?

Q.1 AUM Growth of HDFC Bank Ltd vs Industry Peers?

HDFC Bank Ltd AUM CAGR is 22.68%, compared to the 5-year industry median CAGR of 14.02%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NIM, PPOP, RoA) of HDFC Bank Ltd vs industry peers

HDFC Bank Ltd profit metrics are in line with the industry median level of 7.28%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NIM (%)	3.66	3.91
PPOP (%)	8.86	15.89
RoA (%)	1.7	2.05

Q.3 Operating efficiency of HDFC Bank Ltd vs industry peers?

HDFC Bank Ltd Cost to Income (40.6) is below the industry median of (43.3); while the current ROE (16.7) are above than the 5-year average Industry ROE (15.4). This shows that the business is positioned in the middle quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NIM (%)	3.66	3.91
PPOP (%)	8.86	15.89
RoA (%)	1.7	2.05
Cost to Income (%)	61.5	43.3
ROE (%)	15.1	15.4

Valuation & price assessment

Q.1 Stock return of HDFC Bank Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 10.3% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	10.3%	0.3%	-2.6%	-20.9%

Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	15.37	20.57	13.38
Price to Book	2.01	2.84	1.38
Price to Sales	3.35	4.42	1.77
EV to EBITDA	12.88	15.65	7.70

Q.3 Valuation ratios of HDFC Bank Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 2.01 is lower than its historical median of 2.84, indicating that the stock is trading below its historical average valuation.

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Check Before You Invest : HDFC Bank Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

Check more companies

Check trending companies

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