A valuation of HDFC Bank (HDFCBANK) built from its filed accounts — ten years of results, the method that fits this business, and what today's price already assumes.
Worked backwards from today's share price: the ROE HDFC Bank must sustain to justify what it costs, against what its own record supports.
At the current price the market requires a sustainable ROE of ~14.7% (vs the ~15.4% the history supports). Equivalently, holding ROE at 15.4%, the price is fair only at a cost of equity of ~11.9% (model uses 11.4%).
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit as filed, in ₹ crore.
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| Mar 2017 | 73,271 | 15,317 | 20.9% |
| Mar 2018 | 85,288 | 18,561 | 21.8% |
| Mar 2019 | 1,05,161 | 22,446 | 21.3% |
| Mar 2020 | 1,22,189 | 27,296 | 22.3% |
| Mar 2021 | 1,28,552 | 31,857 | 24.8% |
| Mar 2022 | 1,35,936 | 38,151 | 28.1% |
| Mar 2023 | 1,70,754 | 46,149 | 27.0% |
| Mar 2024 | 2,83,649 | 65,446 | 23.1% |
| Mar 2025 | 3,36,367 | 73,440 | 21.8% |
| Mar 2026 | 3,48,615 | 79,219 | 22.7% |
A bank is not valued with a discounted cash flow. Deposits are its raw material and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
Excess return — the correct lens for a bankThe same valuation, run side by side.
HDFC Bank vs ICICI BankThe two largest private banks, on the same excess-return model.→HDFC Bank vs Kotak Mahindra BankHigher-margin, smaller book — a different trade-off on the same measures.→HDFC Bank vs Axis BankComparable scale, historically a different credit record.→At ₹748 the market is pricing in roughly 14.7% sustained ROE, against the ~15.4% its own record supports. That is close to what it has delivered, so the price is broadly consistent with the company simply continuing as it has.
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
A price-to-earnings of 14.6 and price-to-book of 1.92 sit against a return on equity of 13.6%. Whether that multiple is deserved depends on how durable the return is — which is exactly what the valuation tests.
Revenue went from ₹0.73 lakh crore to ₹3.49 lakh crore over the period shown, while return on equity moved from 18.4% to 13.8%. Growing scale on a rising return is a very different proposition from growing scale on a falling one.
The dividend yield is 1.74%, which is a meaningful part of the total return.
Debt to equity stands at 1.00, down from 1.07 at the start of the period — the balance sheet is a core input to the cost of capital used here.
From published financial statements. The method is chosen to fit the business — a bank on excess return, a regulated utility on its rate base, a conglomerate by its parts — and every assumption is shown with its source. When the numbers do not support a call, no call is published.
A cost of capital of 11.45%, growth drawn from the company's own record rather than from guidance, and the valuation method that fits the business. All of them are listed in the report, with how much each one moves the answer.