HDFC Bank Shares Crash Over 7% In 2-Days, ADR Drops 11%: Why India's Largest Bank Is Facing Extreme Selloffs?

India's largest banking stock, HDFC Bank, has faced massive market rout for the past two days. On July 21st, the stock nosedived by 2.3% alone, extending its losses from 5.12% decline yesterday. Its American Depositary Receipts (ADR) witnessed even a bigger selloff of nearly 11% overnight. The panic among investors erupted after HDFC Bank reported disappointing Q1 results for FY27.

"The low LCR of 115% along with the stretched CD ratio of ~96% limits the bank's ability to grow at a faster pace. Consequently, loan growth has been supported by higher growth in the wholesale portfolio, which has weighed on NIM performance," said analysts at JM Financial in a note.

In Q1FY27, HDFC Bank reported a net profit of Rs 19,060 crore, registering a growth of 5% YoY. While net interest income (NII) rose by 7% YoY to Rs 33,530 crore.

Furthermore, HDFC Bank's average deposits were at Rs 30,115 billion, up by 13.3% YoY and 5.6% QoQ. While the bank's average CASA deposits were at Rs 9,570 billion in Q1FY27, a growth of 11.2% YoY and 4.2% QoQ.

Also, gross advances are at Rs 30,608 billion, an increase of 15.4% YoY. In terms of asset quality, HDFC Bank posted a gross non-performing assets (NPA) ratio of 1.17% of gross advances as of June 30, 2026, which is mildly higher than the 1.15% gross NPA in Q4FY26 but sharply lower from 1.40% gross NPA in the June 2025 quarter.

The result was announced during the weekend and HDFC Bank's stock price reacted negatively this week.

HDFC Bank Share Price

On July 21, HDFC Bank stock stood at Rs 761.75 apiece, down by 2.04% on BSE, with a market cap of Rs 11,72,811.09 crore. This is near its intraday low of Rs 760.10 apiece.

Yesterday, the stock nosedived by 5.12% on BSE.

Cumulatively, the stock has crashed at least 7.3% in these two days.

HDFC Bank ADR:

Its ADR halted three-consecutive sessions gain to crash sharply on Monday. HDFC Bank's ADR dropped by 10.54% to $23.60 apiece on NYSE in the closing bell.

According to experts at Systematix Institutional Equities, HDFC Bank witnessed a sharper NIM compression to 3.40%, which is a decline of 13 basis points sequentially, indicating a weaker asset yields and still-elevated funding costs.

Should Investors Be Worried ?

Despite the latest quarterly performance, analysts at JM are positive on HDFC Bank's NIM performance over the medium term, driven by a gradual run-off of high-cost borrowings. Further, the bank's pristine asset quality should keep credit cost contained.

"We expect it to deliver 15% loan and 14% EPS CAGR over FY26-28E, translating into an average RoA/RoE of 1.8%/14% over FY27-28E. Maintain ADD with a revised TP of Rs 900, valuing the core bank at 1.7x FY28E standalone BVPS and subsidiaries at Rs 138/share," they added.

Meanwhile, analysts at Yes Securities said, "We maintain a relatively recently assigned BUY rating with a revised price target of Rs 1100," adding, "We value the standalone bank at 2.2x FY28 P/BV for an FY27/28/29E RoE profile of 12.8/14.2/15.5%. We assign a value of Rs 119 per share to the subsidiaries."

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