Since the stricter regulations were introduced, HDFC Bank’s share, which once led the market, has become an underperformer. HDFC Bank stock has fallen 0.65% since November 2020, compared to a 17.5% gain on the Bank Nifty index, data from Bloomberg shows.

Despite this underperformance, analysts have remained confident.

Of the 50 analysts following the bank, 46 are recommending a “buy,” three are suggesting a “hold” and one has a “sell” call, according to data from Bloomberg. The average price target over 12 months implies an increase of 41.3%.

These analysts are now hopeful that HDFC Bank and its stocks will regain their mojo.

The end of the regulatory restrictions is lifting a major overhang for the bank and its stocks, Macquarie analyst Suresh Ganapathy said in a March 14 report.

“In our view, the bank will gain market share for most products, including credit cards, where they had lost market share in the past 12 months. Margins and profitability are likely to improve further going forward,” Ganapathy said.

Not everyone agrees.

A consultant working with the bank, who spoke on condition of anonymity, said the bank may be too late to bring its new digital strategies to market. The market is currently approaching saturation with a deluge of payment and credit applications available to retail customers.

Unless HDFC Bank is willing to burn cash in the form of rewards or cashbacks, it won’t attract many users, negating its ability to sell loan products among themselves, the adviser said. On the merchant side, the bank may be able to leverage its long-standing relationships and grow its business through a good platform that offers value-added services and fast lines of credit, the consultant said.

Rao says the goal is bigger than just product or market share.

The goal is to improve the experience of the bank’s existing customers and bring in an entirely newer group of users at India’s largest private bank.

This post HDFC Bank is in a hurry to get its digital Mojo back

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