Back to top

Analyst Blog

We are have maintained our long-term ‘Neutral’ recommendation on HDFC Bank Ltd. (HDB - Analyst Report). The decision is based on the company’s impressive fiscal second-quarter (September 30) results. However, continuously rising operating expenses and increasing competition in the retail space remain the major causes of concern.

HDFC Bank’s Retail Banking segment is expected to be the main driver for earnings growth going forward. Given the boom in the Indian retail credit market and HDFC Bank’s extensive branch network, the company is expected to gain significant market share in the retail credit sector.

Further, HDFC Bank’s main strategy is to enhance its market share in India’s banking and financial services areas. The company has been able to execute this plan through developing new products, conducting disciplined credit risk management and delivering exceptional service to its customers.

Additionally, HDFC Bank’s net income has been growing steadily. The bank remains focused on maintaining earnings augmentation through conservative risk-management techniques and low-cost funding while not relying much on volatile sources including trading and investment banking income.

On the flip side, the competition in the retail segment has intensified due to the re-entry of various competitors. The company mainly competes with other private banks in India such as ICICI Bank (IBN - Analyst Report), UTI Bank, IDBI Bank, IndusInd Bank and state-owned banks, as well as foreign banks that have a notable presence in the country, including Citibank, HSBC Holdings Plc and Standard Chartered.

Moreover, increasing operating expenses are expected to drag down HDFC Bank’s bottom line in the upcoming quarters. Moreover, like most of the Indian banks, the bank is expected to encounter higher cost of funds as it would be necessary for it to raise deposit rates to meet the increasing loan demand.

Currently, the shares of HDFC Bank retain a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%