Shares of leading private lender HDFC Bank fell 1.5% to Rs 766 on Tuesday, extending their decline to over 6% in two sessions, after the bank reported a 5% YoY increase in standalone net profit for the April-June quarter of FY27.

The bank posted a standalone net profit of Rs 19,060 crore for the quarter, compared with Rs 18,155 crore in the corresponding period last year. Net interest income (NII), which reflects the difference between interest earned and interest paid, increased 7% YoY to Rs 33,534 crore from Rs 31,438 crore a year earlier.

Despite the fall, analysts remain bullish on HDFC Bank shares.

Jefferies on HDFC Bank share price

Jefferies maintained its ‘Buy’ call on HDFC Bank shares with a target price of Rs 1,050 (35% upside) apiece.

HDFC Bank remains one of the international brokerage’s top picks, while it noted that the company’s June quarter earnings were in-line with estimates, as a slight miss on NII was offset by lower opex and credit cost. The bank's desire to participate in corp lending lifted loan growth to 16% YoY, but dragged NIMs by 12 bps QoQ, limiting NII growth to 7%, Nomura said, adding that slower growth in opex (slow branch/staff growth) and lower credit costs (low slippages) aided profits.

“We tweak earnings estimates for FY27 and FY29. Improvement in margins should aid earnings that should grow at 15% CAGR in PBT (ex-treasury/ one-offs) over FY26-29 with ROE of 13% in FY27. Valuations at 1.8x FY27 adjusted PB and 14x PE are attractive,” Jefferies further said.

Also read | HDFC Bank Q1 Results: Net profit rises 5% YoY to Rs 19,060 crore, NII up 7%

Nomura on HDFC Bank share price

Nomura also has a ‘Buy’ call on HDFC Bank shares, with a target price of Rs 950 apiece, implying nearly 22% upside potential. The international brokerage noted that the bank reported a largely in-line Q1 FY27 performance.

“We raise our FY27F loan/deposit growth estimates to 16%/17% (from 13%/15%). FY27-28F EPS estimates are largely unchanged, as lower top-line is offset by lower provisions and opex. On the FCNR(B) scheme, management expects to gain a handsome market share, though it did not disclose any quantum. Leadership continuity and FCNR execution remain key near-term monitorables, in our view,” it added.

JM Financial on HDFC Bank stock price

JM Financial has maintained its Add rating on HDFC Bank with a revised target price of Rs 900, implying an upside of around 16%. The brokerage said the bank's liquidity coverage ratio (LCR) of 115% and a credit-deposit ratio of around 96% limit its ability to accelerate loan growth. As a result, loan growth has been driven by the wholesale portfolio, which has weighed on net interest margins (NIM).

Read more: Q1 earnings begin on a strong note as banks fuel double-digit growth

However, JM Financial remains constructive on the bank's medium-term margin outlook, expecting NIM to improve as high-cost borrowings gradually run off. It also believes HDFC Bank's strong asset quality will keep credit costs under control. The brokerage expects the bank to deliver 15% loan CAGR and 14% EPS CAGR over FY26-28E, translating into an average RoA of 1.8% and RoE of 14% over FY27-28E.