Why Is the HDFC Bank Share Price Falling?

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HDFC Bank, the largest private sector lender, had announced a bonus issue along with its quarterly results last month. HDFC’s bonus ratio was 1:1, which means shareholders will receive one bonus equity of face value of ₹1 for every fully paid-up equity share held. HDFC Bank’s share price has declined 3% over the past month but has remained essentially unchanged over the past 3 months. 

The HDFC Bank share price has been steadily falling this year, disappointing investors. Since the Q3 results were announced, HDFC Bank’s shares have been in a downward trend. Meanwhile, HDFC Bank met expectations on headline numbers, but it was disappointing for investors who wanted high returns, as the bank’s net profit rose 33% year-on-year (YoY) to ₹163.7 bn. 

Key Reasons for Decline in the Share Price of HDFC Bank 

The main reason for HDFC Bank’s share price decline is the implementation of its 1:1 bonus share issuance, as the stock began trading ex-bonus on the NSE and BSE. When a company issues bonus shares, the number of shares held by investors doubles, but the price of each share adjusts downward in the same proportion. 

Two significant events have followed the Bonus Issue:

HDFC Bank shares dropped by almost 2% in early trade before recovering slightly later in the session. This move followed two big events: 

• A huge block deal of 15.6 lakh shares which changed trading activity and short-term pressure on the stock price.
• The Bonus issue adjustment: The stock traded after a 1:1 bonus share issue announced in mid-July, meaning shareholders received one new share for every old share.

Impact of Bonus Issue on the HDFC Bank Share

When a company issues bonus shares, the number of shares held by investors doubles, but the price per share adjusts downward by the same proportion. For HDFC Bank, the share price falling means:

• A 1:1 bonus issue is when every shareholder receives one additional share for each share they already own.
• The share price automatically halves, but the total holding has not changed; it is a technical adjustment when no new money enters the company.   

HDFC Bank: An Overview

HDFC Bank Limited is an Indian banking and financial services company headquartered in Mumbai. It is India’s largest private sector bank by assets and market capitalisation. Shares of HDFC Ltd were delisted, and shareholders were allotted 42 shares of HDFC Bank, which had a market capitalisation of $154 billion. It became the seventh-most-valuable bank in the world. HDFC Bank also became one of the world’s top 100 banking companies by total assets. The combined entity had a customer base of 12 crore, which was expected to surpass Germany’s population.   

HDFC Bank offers a range of products and services, including wholesale banking, retail banking, treasury, auto loans, two-wheeler loans, personal loans, and loans against property. The equity shares of HDFC Bank are listed on the Bombay Stock Exchange and the National Stock Exchange of India.

HDFC Bank: Performance Analysis 

Total Revenue of HDFC Bank Ltd. for FY2019, FY2020, FY2021, FY2022, FY2023, FY2023, and FY2024 are ₹ cr., ₹3,000.45cr., ₹4,187.33cr., ₹51,207.06cr., ₹89,369.76cr., and ₹89,264.56cr. According to HDFC Bank Ltd.’s Income Statement, over the last five years, revenue has grown at an annual rate of 18.05%, compared to the industry average of 22.08%. The FII/FPI holdings decreased from 48.84% to 48.38% in September 2025, while mutual fund holdings increased from 25.61% to 26.02% in the same year. 

The number of mutual fund schemes has increased from 698 to 726 this year, and institutional investors have decreased their holdings from 84.79% to 84.63%. The HDFC Bank Ltd’s current P/E is 21.38, while its 5-year P/E average is 27.4%, and the forward P/E based on analysts’ estimates is 20.7.

Growth Prospects and Positive Factors: A Future Anticipation 

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• Even a blue-chip company like HDFC Bank needs to review its financials, as its share price has fallen 11% this year.
• The positive effect will be observed through the merger’s impact on HDFC Bank’s profitability. The merger is set to be a win for all parties, such as investors, customers, and the company.
• The HDFC Bank shares of Karur Vysya Bank will also be trading, adjusted for the bonus issue of shares, and some analysts have noted that while the price per share has fallen significantly, the total investment value remains unchanged.
• HDFC Bank remains well-positioned in the sector through its branch network and operational efficiency, although market competition and investor expectations of a decline in HDFC Bank Ltd.’s share price pose challenges.  

What are the Future Predictions of Analysts?

According to Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, the ex-bonus adjustment is purely an accounting process. It does not impact the firm’s fundamentals or the overall value of the investment. However, as investor perceptions and trading dynamics generally shift with share volatility —becoming more affordable and liquidity improving due to higher float —trading activity often receives a boost. Santosh Meena, Head of Research at Swastika Investmart, said that over the past five years, HDFC Bank delivered a high-growth 21% CAGR in profit, maintained a healthy dividend payout ratio (~23%), and achieved solid median sales growth (~16% over ten years).   

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What is the Right Time to Buy HDFC Bank Shares?

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According to analysts, the HDFC Bank Ltd share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all factors before investing in the HDFC Bank. There are some factors to consider before investing in the HDFC Bank:

• Strong Fundamentals: Investors must review the company’s fundamentals before investing in HDFC Bank shares, including management quality, debt repayment structure, and profitability.
• Economic Indicators: Investors must stay informed about market structure and other financial indicators that could impact the investment. Market volatility and other geographical conditions could also affect the investment decision.
• Tax Implications: Tax policies have a significant impact on HDFC Bank; prices may fluctuate sharply if taxes are increased or decreased in the near future, so investors may gain profits or suffer losses from tax policies.
• Liquidity: When HDFC Bank shares are highly liquid, it is considered the best time to invest, as trading volume is very high and investors can profit from their liquidity.

Conclusion

HDFC Bank, the largest private sector lender, had announced a bonus issue along with its quarterly results last month. HDFC’s bonus ratio was 1:1, which means shareholders will receive one bonus equity of face value of ₹1 for every fully paid-up equity share held. The positive effect will be observed through the merger’s impact on HDFC Bank’s profitability. The merger is set to be a win for all parties, such as investors, customers, and the company. Santosh Meena, Head of Research at Swastika Investmart, said that over the past five years, HDFC Bank delivered a high-growth 21% CAGR in profit, maintained a healthy dividend payout ratio (~23%), and achieved solid median sales growth (~16% over ten years). HDFC Bank remains well-positioned in the sector through its branch network and operational efficiency, although market competition and investor expectations of a decline in HDFC Bank Ltd.’s share price pose challenges.  

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FAQs

What are the key reasons for the decrease in the HDFC Bank?

Ans. The main reason for HDFC Bank’s share price decline is the implementation of its 1:1 bonus share issuance, as the stock began trading ex-bonus on the NSE and BSE. When a company issues bonus shares, the number of shares held by investors doubles, but the price of each share adjusts downward in the same proportion. 

What are the factors to consider before investing in the HDFC Bank shares?

Ans. Investors must review the company’s fundamentals before investing in HDFC Bank shares, including management quality, debt repayment structure, and profitability. Investors must stay informed about market structure and other financial indicators that could impact the investment. Market volatility and other geographical conditions could also affect the investment decision.

What is the performance analysis of the HDFC Bank shares?

Ans.  The number of mutual fund schemes has increased from 698 to 726 this year, and institutional investors have decreased their holdings from 84.79% to 84.63%. The FII/FPI holdings decreased from 48.84% to 48.38% in September 2025, while mutual fund holdings increased from 25.61% to 26.02% in the same year.

What are the growth prospects for investing in the HDFC Bank shares?

Ans.  The positive effect will be observed through the merger’s impact on HDFC Bank’s profitability. The merger is set to be a win for all parties, such as investors, customers, and the company. The HDFC Bank shares of Karur Vysya Bank will also be trading, adjusted for the bonus issue of shares, and some analysts have noted that while the price per share has fallen significantly, the total investment value remains unchanged.

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