Investing.com - JPMorgan upgraded HDFC Bank Ltd (HDFCB:IN) (NYSE:HDB) from Neutral to Overweight on Monday, while lowering its price target to INR1,010.00 from INR1,090.00.
The upgrade follows a 24% year-to-date share price correction that pushed the bank's valuation to its lowest price-to-book ratio on a 12-month forward rolling basis since the merger announcement in April 2022. The bank now trades at a 16-year low of 1.5x price-to-book on fiscal year 2028 estimates for the parent company. The stock currently trades at $24.35, hovering near its 52-week low of $24.30, with shares down 33% year-to-date. According to InvestingPro analysis, the RSI suggests the stock is in oversold territory, potentially signaling a buying opportunity for value investors.
HDFC Bank has underperformed peers including ICICI Bank, which declined 8% year-to-date, as well as the broader NIFTY index, which fell 13% year-to-date. The bank now trades at a two-year high 17% discount versus ICICI Bank on 12-month forward price-to-book value.
JPMorgan bases its upgrade on expectations for a recovery in system credit growth, positive return on assets inflection as higher-cost borrowings are replaced by low-cost deposits, and the bank's strong asset quality review track record and liability franchise. The firm revised its fiscal year 2026 and 2028 earnings estimates by -0.2% and -1.7%, respectively. InvestingPro data indicates the stock appears undervalued, with Fair Value analysis suggesting meaningful upside potential from current levels. The platform offers 12 additional ProTips for HDFC Bank, along with comprehensive financial health scores and detailed Pro Research Reports.
The price target adjustment reflects net interest margin pressure from elevated competition and a lower valuation of subsidiaries at Rs94 compared with Rs129 previously. JPMorgan's fiscal year 2026-2028 earnings estimates remain 2-3% below Bloomberg consensus.
In other recent news, HDFC Bank has released its third-quarter earnings for 2025, which showed that the company met earnings per share (EPS) expectations but slightly missed revenue forecasts. The bank reported an EPS of $0.4004, which aligned with market forecasts. However, its revenue came in at $5.05 billion, slightly below the anticipated $5.10 billion. Despite the revenue miss, the market's reaction was neutral to slightly positive. Investors may find it noteworthy that the earnings report did not significantly impact the stock price. Analysts had projected the EPS accurately, reflecting a stable financial performance for the quarter. These recent developments provide insights into HDFC Bank's financial health and market position.