HDFC Bank share price hits record high. Is HDB Financial IPO the reason?

HDFC Bank share price: The shares of India's largest private lender, HDFC Bank, climbed to a fresh record high on Thursday, June 26, amid a strong sentiment in the Indian stock market and a decent demand for the initial public offering (IPO) of its subsidiary HDB Financial.

Analysts also believe that expectations of a strong performance for the banking pack in the fiscal 2025-2026 are also fuelling the rally in sectoral stocks.

HDFC Bank share price rose nearly 1% to a new high of ₹1997.90 on the BSE, extending its gains to the third consecutive day.

HDB Financial IPO

The HDB Financial IPO kicked off for subscription on Wednesday, June 25, and entered its second day of subscription today, garnering a healthy 45% bids as of 10.35 am today. The non-institutional investor portion was on the cusp of sailing through, with 95% bids. HDFC Bank is offloading a stake worth ₹10,000 crore in the NBFC arm via OFS, earning the private bank almost 1495% return on its initial investment.

“The market seems to view the HDB Financial IPO's valuation quite favourably. HDFC Bank is expected to receive an inflow of around ₹10,000 crore from the OFS, as they’re offloading a stake. This one-time gain will likely reflect in the April–June quarter, and that’s one reason the stock is up,” explained stock market expert Avinash Goranshkar.

Also, after a long time, we’re seeing value unlocking from HDB, which many investors were expecting to happen last year. The fact that it’s finally happening now is a big positive, he added.

“While ₹10,000 crore might not be a large amount for HDFC Bank in the larger scheme of things, it does add to the kitty. More importantly, it marks a shift in the overall narrative for the bank and the sector. Both fee-based and non-fee-based income streams are likely to improve going forward, and that contributes to the positive sentiment,” Goranshkar explained.

He also views HDFC Bank retaining control of HDB Financial as another important factor. “That means HDFC Bank will benefit from the market cap uplift, which wasn’t previously reflected in their books when HDB was a privately held company. And let’s not forget—HDFC is a major player in the NBFC space. With RBI’s recent interest rate cuts and a more supportive regulatory environment, the outlook for FY26 is turning quite positive for NBFCs as well,” he added.

Banking sector outlook

He also attributed the rise in HDFC Bank shares to a positive outlook for the banking pack.

"The banking sector is going to do well in the financial year 2025–2026, even though trade growth has slowed. We are likely to see significant infrastructure investment, both from the government and from the private sector. This will increase the overall demand for funding from banks,” Goranshkar added.

According to a report by SBI Securities, dated May 29, the banking system remains in a strong position. Ample liquidity, potential relaxation in LCR norms, and historically low NPAs could help maintain profitability, the brokerage opined. Banks with robust deposit franchises and faster balance sheet growth will be best positioned to navigate the evolving interest rate environment and sustain record profits in FY26, it added.

HDFC Bank share price: Time to buy?

In recent sessions, HDFC Bank stock has shown signs of relative strength compared to its private banking peers. Analysts believe there has been a visible shift in fund flow from ICICI Bank and Kotak Bank into HDFC Bank, indicating growing investor confidence.

On the technical front, HDFC Bank stock is currently trading near a strong resistance zone around ₹2,000, a level from which sharp selling was previously observed, said Kunal Kamble, Sr. Technical Research Analyst at Bonanza. He believes a decisive close above ₹2,000 would confirm a breakout, opening the path for an upside move toward ₹2,050– ₹2,100.

“Technically, the stock is trading above all major EMAs, reflecting a bullish bias. The RSI is holding in the higher range, supporting upward momentum. Additionally, DI+ trading above DI− signals an ongoing uptrend, while the ADX above both DI lines suggests strength behind the current move,” said Kamble.

The overall setup remains bullish, but confirmation will come only with a close above ₹2,000, he said, adding that a fall below ₹1,970 would negate the bullish view and indicate a possible pullback.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.