HDFC Bank shares jump 22% from 52-week low in 10 days; analysts see private lender nearing an inflection point. Time to buy or wait?

Shares of HDFC Bank have been on a sharp rally recently, surging around 22% from their 52-week low over the past 10 days, with analysts expecting the private lender to see renewed buying interest as leadership worries fade and operational performance improves.

After hitting a 52-week low of Rs 669.20 apiece on the NSE at the end of October, the lender's shares rallied around 22% in 10 sessions to hit a near four-month high of Rs 815.50 apiece on Wednesday. The sharp gains have added around Rs 2.26 lakh crore to the company’s market capitalisation.

This comes after a sharp selloff in the stock earlier this year which was triggered after former part-time Chairman Atanu Chakraborty resigned, stating that some practices within the bank did not match his personal values and ethics. The governance cloud led to a massive selloff that recovered slightly after the bank made leadership changes.

Will HDFC Bank shares rally more?

The lackluster operational performance, management transition uncertainty and governance related issues had weighed on the stock performance for long, but now with the management overhang addressed and operational performance on an improving trajectory, Dnyanada Vaidya, Research Analyst on BFSI at Axis Direct, expects HDFC Bank to see renewed buying interest.

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At present, HDFC Bank appears to be nearing an inflection point, with the Q2 margins at a trough, improving operating productivity and accelerating retail/MSME momentum setting the stage for a gradual recovery in earnings, the analyst said. He added that the higher share of floating rate loans along with an improving mix of better yielding retail or MSME loans bode well from a margins standpoint. Current valuations, despite the run-up in the stock, are attractive, he further said.

HDFC Bank has moved past one of its biggest overhangs, the management transition. Coupled with its strong performance in H1 FY27, this further strengthens Bajaj Broking Prive’s long-term conviction in the bank, said Payal V Pandya, Vice President at the broking firm.

While the stock has already rebounded nearly 18% from its recent lows, the analyst believes the drivers of future growth are only beginning to gain momentum. Investors should consider continuing to hold the stock and use any meaningful correction as an opportunity to gradually accumulate positions, she said.

Vaidya from Axis Direct meanwhile recommends a Buy rating on the stock. However, strong performance on NIMs and consistent execution on pick up in retail growth and deposit mobilisation under the new management remain key re-rating levers.

“We continue to maintain a positive stance on the HDFC Bank from a long term perspective. With the top-level management overhang already addressed, the new MD & CEO’s strategic roadmap would be a key monitorable. Additionally, the management has to look for a new DMD and Head of Credit after Mr. Bharucha’s resignation. We believe along with business metrics improvement and exploiting merger-related synergies, Mr Bagachi has to balance top-management attrition and build a strong business team,” said Sunny Agrawal, Head of Fundamental Research at SBI Securities.

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Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary 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 disclaimershere