HDFC Bank is facing renewed selling pressure as weaker-than-expected earnings momentum, a narrowing net interest margin and an internal probe into alleged information leaks weigh on sentiment, despite continued support from domestic investors and bullish broker ratings.
HDFC Bank’s shares have come under renewed pressure as investors weigh a combination of weaker-than-expected earnings momentum, margin strain and fresh governance concerns, according to market commentary and reports on the lender. The latest sell-off has been accompanied by a Reuters-style risk assessment from analysts who say the stock remains vulnerable to lingering questions about the 2023 merger with HDFC Ltd and whether growth can re-accelerate at the pace the market had once expected.
The company is also facing scrutiny over an internal review that, according to Bloomberg and later reports in Indian media, found that two senior executives had disclosed confidential business strategy and potentially market-sensitive information to outsiders. The bank has not commented on the allegations. Several reports said the findings were circulated to senior management and some board members, adding to a period of transition at the top of the lender ahead of Anup Bagchi’s planned arrival as chief executive on 27 October 2026.
The governance questions come as foreign investors have cut back their exposure to India’s largest private-sector bank. Foreign institutional investors held 39.4 per cent of HDFC Bank as of 30 September 2026, down from 48.4 per cent a year earlier, while domestic mutual funds lifted their stake to 31.9 per cent from 26 per cent over the same period, according to the shareholding data cited in the report. That shift suggests domestic institutions have helped absorb some of the selling, even as overseas ownership has diminished.
Operationally, HDFC Bank’s September-quarter results showed steady but softer-than-hoped progress. Consolidated net profit rose 5.6 per cent from a year earlier to Rs 20,700 crore, while net interest income increased 9.7 per cent to Rs 34,619 crore. Even so, the bank’s net interest margin narrowed to 3.16 per cent, underlining the pressure on lending profitability. Gross advances stood at Rs 32.2 lakh crore. Despite the recent share price weakness, brokerage opinion remains broadly constructive: among 50 firms tracked in the report, 48 rate the stock a buy, with two on hold and none recommending a sell. BNP Paribas has the highest target price at Rs 1,270, while other brokerages including InCred Research, Bernstein, YES Securities, Kotak Institutional Equities, Emkay Global and CLSA continue to see upside, albeit with varying degrees of conviction.
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