HDFC Bank Soars: 7 Powerful Reasons Why Shares Jumped 3% After Q4 Boost

HDFC Bank shares surged nearly 3% on April 4, 2025, after the bank released an encouraging business update for the March quarter. The lender reported a 5.4% year-on-year rise in total advances, reaching ₹26.4 lakh crore, while deposits grew 15.8% to ₹25.3 lakh crore. Notably, CASA deposits increased 5.7% to ₹8.3 lakh crore, supporting a healthy CASA ratio of 34.8%.

Retail loans saw a steady 9% growth, and commercial and rural banking loans jumped 12.8%, though corporate loans slipped 3.6%. Sequentially, gross advances and deposits rose 4% and 5.9% respectively from the previous quarter. Brokerages like Motilal Oswal and InCred Equities praised the bank’s performance, with Motilal maintaining a ‘buy’ rating and InCred setting a target price of ₹2,150. Analysts credited the growth to strong momentum in rural and retail lending. HDFC Bank stood out as a market outperformer amid broader market weakness.

HDFC Bank Soars: 7 Powerful Reasons Why Shares Jumped 3% After Q4 Boost

Shares of HDFC Bank, India’s largest private lender, climbed nearly 3% on April 4, 2025, after the bank released a strong business update for the January–March quarter (Q4 FY25). The rally stood out on a day when broader stock markets remained sluggish, reflecting investor confidence in the bank’s growth momentum. Several top brokerages reaffirmed their bullish stance on the stock, citing healthy loan and deposit growth as key drivers.

Strong Loan and Deposit Growth

The bank reported a 5.4% year-on-year (YoY) increase in total loans (advances), reaching ₹26.4 lakh crore by the end of March 2025. Deposits grew even faster, rising 15.8% YoY to ₹25.3 lakh crore. A significant portion of these deposits—₹8.3 lakh crore—came from low-cost current and savings accounts (CASA), which expanded by 5.7% YoY. This pushed the CASA ratio (the share of low-cost deposits in total deposits) to 34.8%, signaling a stable and cost-efficient funding base for the bank.

Segment-Wise Performance

Retail loans, a core focus area for HDFC Bank, grew by 9% YoY, reflecting steady demand for personal loans, credit cards, and mortgages. The commercial and rural banking segment saw an impressive 12.8% jump in lending, underscoring the bank’s expanding reach in smaller towns and rural markets. However, corporate loans dipped by 3.6% YoY, likely due to cautious lending amid economic uncertainties.

On a quarterly basis, gross loans rose 4% and deposits increased 5.9% between December 2024 and March 2025. The average loan book during Q4 stood at ₹26.95 lakh crore, up 7.3% YoY, indicating sustained demand across customer segments.

Brokerages Back Growth Momentum

Analysts at Motilal Oswal highlighted that HDFC Bank’s loan growth exceeded expectations, while deposit growth remained robust. They retained a “buy” rating, emphasizing the improved CASA ratio as a sign of healthier liquidity management. The brokerage also noted that the bank’s ability to attract low-cost deposits would help maintain profitability in a competitive market.

InCred Equities echoed this optimism, calling the quarterly performance “resilient” despite challenges in corporate lending. They pointed out that growth was driven by strong momentum in commercial and rural loans, while retail lending stayed stable. The firm reiterated a “high-conviction add” recommendation with a target price of ₹2,150 per share—a potential upside of over 17% from current levels.

Market Reaction and Outlook

By late morning trading on April 4, HDFC Bank shares were up 2.05% at ₹1,830.5 on the BSE, outperforming the benchmark Sensex, which traded flat. Investors appeared to shrug off broader economic concerns, focusing instead on the bank’s solid fundamentals and growth trajectory.

The bank’s focus on diversifying its loan portfolio—particularly in rural and semi-urban markets—has helped offset weaknesses in corporate lending. Additionally, its aggressive deposit mobilization strategy, especially in CASA, positions it well to manage interest rate fluctuations and maintain healthy net interest margins (NIMs).

Challenges Ahead

While the quarterly update was largely positive, analysts flagged potential headwinds. The decline in corporate loans could reflect slower capital expenditure in certain industries, which might persist if economic growth moderates. Moreover, competition for deposits remains intense across the banking sector, which could pressure margins if rates rise further.

Conclusion

HDFC Bank’s Q4 performance reinforces its position as a leader in India’s banking sector, with balanced growth across retail, rural, and commercial segments. Brokerages remain confident in its ability to deliver consistent returns, driven by strong execution and a diversified business model. For investors, the stock’s recent uptick and optimistic price targets suggest continued faith in its long-term potential. However, as with all investments, careful evaluation of market conditions and personal financial goals is advised.

This article does not provide investment advice. Consult a certified financial advisor before making any decisions.