HDFC group stocks have had a weak one year on Dalal Street, with four listed names together losing about Rs 4.38 lakh crore in market value over the last 12 months. The biggest drag has been HDFC Bank. The stock has fallen 26% in one year, wiping out Rs 3.73 lakh crore in market value. Its market cap declined to Rs 11 lakh crore from Rs 15 lakh crore a year earlier.
HDFC Life Insurance has been the worst performer in percentage terms. The stock has dropped 29% in one year, erasing Rs 47,261 crore in market value. Its market cap fell to Rs 1.2 lakh crore from nearly Rs 1.7 lakh crore. HDB Financial, meanwhile, has declined 13% over the same period, losing Rs 8,458 crore in market value. HDFC AMC has fallen 7%, with its market value down Rs 8,649 crore.
The underperformance shows how even India’s strongest financial services franchises have struggled when growth, margins and valuations came under pressure at the same time.
For HDFC Bank, the problem has been the long shadow of the HDFC merger. The merger sharply expanded the bank’s balance sheet, but it also brought lower-yielding assets and higher funding costs. The bank’s net interest margin stood at 3.26% in the June quarter, below the 4% level seen before the merger with parent HDFC in 2023.
Investors had expected the merger to create a stronger financial giant with better cross-selling and a bigger customer base. Instead, the stock has been punished because the improvement in margins has taken longer than expected. Analysts say the merger pushed HDFC Bank’s credit-deposit ratio to elevated levels, forcing the bank to rely on costlier deposits and borrowings.
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