HDFC Bank Share Price Rises | 12% Profit, Bonus Share Added

HDFC Bank shares jump ~2% after stellar Q1 profits, ₹5 special dividend & first-ever 1:1 bonus shares. See stock outlook & analyst targets today.

HDFC Bank Delights Investors with Strong Q1, Bonus Shares, and Special Dividend

India's largest private sector lender, HDFC Bank, has kicked off the financial year 2025-26 with a series of announcements that have sent positive ripples through the stock market. Following its board meeting on Saturday, July 19, 2025, the bank reported a robust 12.2% year-on-year rise in standalone net profit for the June 2025 quarter. Adding to the cheer, the board also approved a historic 1:1 bonus share issue – the first in the bank's history – and declared a special interim dividend of ₹5 per equity share. These significant developments have been met with enthusiasm by investors, leading to a noticeable uptick in the bank's share price on Monday, July 21, 2025.

The combined impact of strong financial performance, a generous dividend, and the maiden bonus issue underscores HDFC Bank's commitment to shareholder value and its confidence in future growth. This move is particularly significant as it aims to enhance liquidity and make the stock more accessible to a wider base of retail investors.

Stellar Q1 FY26 Results: A Deep Dive into HDFC Bank's Earnings

For the quarter ended June 30, 2025, HDFC Bank reported a standalone net profit of ₹18,155 crore, marking a substantial 12.2% increase compared to ₹16,175 crore in the corresponding period last year. This impressive growth was primarily driven by a sharp surge in 'other income' and a lower tax outgo, even as provisions saw a significant increase, reflecting a cautious approach to risk management.

• Total Income: Rose by 18.5% year-on-year to ₹99,200 crore.
• Net Interest Income (NII): Grew by 5.4% year-on-year to ₹31,440 crore.
• Other Income: Witnessed a remarkable 103.7% jump, contributing significantly to the profit. This includes a substantial transaction gain of ₹9,130 crore from a partial stake sale in its subsidiary, HDB Financial Services, through its recent IPO.
• Provisions: Increased sharply to ₹14,442 crore from ₹2,602 crore a year earlier, including a floating provision of ₹9,000 crore.
• Asset Quality: Gross Non-Performing Assets (GNPA) ratio saw a slight uptick to 1.40% as of June 30, 2025, from 1.33% in the previous quarter.
• Advances and Deposits: Gross advances stood at ₹26.53 lakh crore (up 6.7% YoY), while average deposits grew by 16.4% year-on-year to ₹26.57 lakh crore.

Despite some margin pressures and increased provisioning, the overall standalone performance showcases the bank's underlying strength and operational efficiency.

Historic Move: HDFC Bank Announces 1:1 Bonus Shares

In a landmark decision, HDFC Bank's board has approved its first-ever bonus share issue in a 1:1 ratio. This means that for every one fully paid-up equity share held, shareholders will receive one additional equity share free of cost. This move, subject to shareholder and regulatory approvals, is a significant milestone in the bank's corporate history.

• Ratio: 1:1 (One bonus share for every one existing share).
• Record Date for Bonus Issue: Wednesday, August 27, 2025. Shareholders holding shares on this date will be eligible.
• Implication: While the number of shares held by an investor will double, the share price is expected to adjust proportionally downwards on the ex-bonus date, meaning the total value of their holding remains the same immediately after the bonus issue. However, it increases liquidity and makes the stock more affordable for new investors.

Historically, HDFC Bank has opted for stock splits (in 2011 and 2019) but never a bonus issue. This decision reflects the bank's strong reserves and its intent to reward loyal shareholders while potentially expanding its shareholder base.

Rewarding Shareholders: ₹5 Special Interim Dividend Declared

Further sweetening the deal for investors, HDFC Bank has also declared a special interim dividend of ₹5 per equity share for the financial year 2025-26. This represents a substantial 500% payout on the face value of Re 1 per share.

• Dividend Amount: ₹5 per equity share.
• Record Date for Dividend: Friday, July 25, 2025.
• Payment Date: Monday, August 11, 2025.

HDFC Bank has a consistent track record of dividend payouts, and this special interim dividend further reinforces its commitment to distributing profits to its shareholders.

Market Response and Analyst Targets: What's Next for HDFC Bank Shares?

Following these announcements over the weekend, HDFC Bank's share price witnessed a positive reaction on Monday, July 21, 2025, gaining more than 2% in early morning trades. This uplift comes after the stock closed slightly lower on Friday, prior to the results and bonus announcement. The market's positive sentiment reflects confidence in the bank's fundamentals and its shareholder-friendly policies.

Leading brokerage firms and analysts have largely maintained a positive outlook on HDFC Bank.

• Jefferies India Pvt Ltd: Retains a 'Buy' call, raising its price target to ₹2,400 (from ₹2,340 earlier). They view the Q1 performance as ahead of estimates, citing better loan growth, healthy deposit growth, and stable asset quality.
• Motilal Oswal Financial Services (MOFSL): Maintains a 'BUY' rating with a target price of ₹2,300. They expect HDFC Bank to deliver a Return on Asset (ROA) of 1.9% and Return on Equity (ROE) of 14.9% by FY27, supported by the gradual retirement of high-cost borrowings and improved operating leverage.
• Nuvama: Maintains a 'Buy' rating, raising its target price from ₹2,195 to ₹2,270.

Analysts generally expect a slight moderation in Net Interest Margin (NIM) in the immediate next quarter due to rate cuts but anticipate improvement thereafter. The overall consensus points towards HDFC Bank remaining a top pick in the banking sector, driven by its robust business growth and strong fundamentals.

What This Means for HDFC Bank Investors

For existing shareholders, the bonus issue and special dividend are direct rewards for their investment. While the bonus issue doesn't immediately increase the value of their holdings, it signals confidence from the management and can lead to increased liquidity and potential future appreciation. The dividend provides immediate cash returns.

For potential investors, the bonus issue makes the stock more accessible at a lower per-share price post-adjustment, potentially attracting a broader retail participation. The strong Q1 results and positive analyst outlook further solidify HDFC Bank's position as a fundamentally sound investment in the long term. The bank's strategic divestment in HDB Financial Services also contributed significantly to its Q1 'other income', showcasing its ability to unlock value from its subsidiaries.

HDFC Bank: A Strong Start to FY26

HDFC Bank's Q1 FY26 performance, coupled with its historic 1:1 bonus share issue and a special ₹5 dividend, paints a highly optimistic picture for the bank's future. These moves reinforce its position as a leading financial institution committed to delivering shareholder value and sustained growth.

Investors will keenly watch HDFC Bank's trajectory as it navigates the evolving economic landscape, poised for continued success.