Meanwhile, many Indian banks are struggling to hoover up low-cost deposits as savers look for higher yields in the stock market. That’s hurting net interest margins, with HDFC’s and Axis Bank's expected to fall again this financial year, per estimates collated by Visible Alpha. Industry-wide bank deposits dropped to around one-third of household financial savings in the 13 years to the end of March 2025, while equity and mutual funds grew sevenfold to over 15%, government data show.
HDFC’s valuation lags peers after multiple setbacks
That Indian banks would sport higher book value multiples than their Western peers used to be almost as reliable as the sun coming up in the morning. Even after a lending crisis last decade, the country retained the lead, with $118 billion HDFC Bank often at the front. Not any longer. A resurgence of players like HSBC and JPMorgan as well as the rise of India’s capital markets have both landed blows on the sector. In HDFC’s case, its own governance and margin woes have completed a triple whammy.
The Mumbai-based bank run by Sashidhar Jagdishan currently trades at less than 2 times its estimated book value 12 months from now, per LSEG data. A few years ago, most developed-market peers could only dream of such a level. Now, thanks to resurgent earnings and, in the U.S. at least, a regulatory proposal to cut capital requirements, they sport book multiples most have not worn since the 2008 financial crisis. JPMorgan’s, for example, is now at 2.5 times; the new king of the metric is $206 billion Commonwealth Bank of Australia at 3.7 times.
Governance issues and business restrictions have hurt HDFC and peers
HDFC, though, has also shot itself in the foot. In 2020 the Reserve Bank of India barred it from issuing new credit cards after recurring online shutdowns. A 2023 merger with its mortgage-lender parent failed to live up to its promise. In March its chair resigned citing ethical differences with management. Last month the board fined top executives including Jagdishan for improprieties in deposit pricing while exonerating their actions as "business overreach". The successive crises reflect poorly on Aditya Puri, HDFC's Managing Director and CEO from its inception in 1994 until 2020.
It’s not alone. The $41 billion Kotak Mahindra Bank trades at 2.5 times forward book value that’s half its 2019 peak, having been beset by a poorly handled leadership transition and business restrictions akin to HDFC's.
Lifting those curbs has done little for either firm’s valuation. Not all the country’s lenders are suffering from valuation blues: $107 billion ICICI Bank has undergone a successful turnaround and trades at nearly 3 times book. But HDFC’s path back to the top has too many obstacles.
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