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Today's prices ask more of Kotak Mahindra Bank than of HDFC Bank.
At current prices, buyers of HDFC Bank are assuming about 15.0% return on equity against 15.1% in its own record; for Kotak Mahindra Bank it is 16.3% against 13.1%. That shows which share needs more to go right — not which is cheaper. How far each trades from its estimated fair value is in the full valuations.
- Valuation method: both on excess return.
- Size: HDFC Bank is worth about 2.6 times Kotak Mahindra Bank on the stock market.
- Record: HDFC Bank has grown revenue faster: HDFC Bank compounded at about 22% a year (FY2019–FY2026) and Kotak Mahindra Bank at about 13% (FY2019–FY2026).
- What to watch: return on equity at HDFC Bank; return on equity versus capital at Kotak Mahindra Bank.
| HDFC Bank | Kotak Mahindra Bank | |
|---|---|---|
| Price | ₹804 | ₹489 |
| Market cap | ₹12.40L Cr | ₹4.86L Cr |
| P/E | 15.5 | 22.6 |
| P/B | 2.13 | 2.68 |
| Fair value 🔒 sign in | ₹0,000 | ₹0,000 |
| Upside 🔒 sign in | +00% | +00% |
| Valued on | Excess return | Excess return |
01Two businesses
India's largest private bank, reshaped by a merger
HDFC Bank is India's largest private-sector bank, built on retail lending, low-cost current and savings deposits and a long record of keeping bad loans low. In July 2023 it merged with HDFC Ltd, the housing-finance company that founded it, adding a large home-loan book and bringing the group's life insurer, general insurer and asset manager under the bank.
From finance company to full financial group
Kotak Mahindra Bank grew out of a finance company founded by Uday Kotak in 1985 and became a bank in 2003. Alongside lending and deposits, the group runs one of India's larger broking and investment-banking businesses, a life insurer, an asset manager and a car-finance arm.
02The records side by side
HDFC Bank has grown revenue faster: HDFC Bank compounded at about 22% a year (FY2019–FY2026) and Kotak Mahindra Bank at about 13% (FY2019–FY2026). By revenue, HDFC Bank is about 4.6 times the size of Kotak Mahindra Bank. HDFC Bank kept 15.3% of revenue as net profit in FY2026; Kotak Mahindra Bank kept 17.8% of revenue as net profit in FY2026.
Full ten-year tables and charts are on each company's page: HDFC Bank · Kotak Mahindra Bank.
03What each price assumes
Work backwards from each share price and you can see what buyers are taking for granted — the rate each company must sustain to justify what it costs, against what its own record supports.
04What decides each one's value
- Return on equityA bank is worth more than its book only to the extent it earns above its cost of equity. The 'what each price assumes' figure above shows how much return today's price already takes for granted.
- Deposit growthHow fast it gathers cheap deposits sets how fast it can lend without pushing up its funding costs.
- Return on equity versus capitalKotak holds more capital per rupee of loans than most peers, which caps its return on equity unless growth picks up.
- The deposit franchiseLow-cost current and savings deposits are the cheapest funding a bank can have; keeping them is central to its margins.
05What could go wrong
- Slower growth for longerIf the deposit catch-up takes longer, loan growth stays below its historical pace.
- Interest-rate cutsFalling rates can squeeze lending margins before deposit costs adjust.
- Regulatory actionThe 2024 RBI restriction showed how quickly technology lapses can stall growth.
- Slower growth than peersCaution can mean losing share in a strong credit cycle.
06Which is better value?
Sign in free to see which trades further below its worth
- ✓Both fair values per share — each on the method that fits the business
- ✓Every step of both workings — growth, margins and cost of capital, with sources
- ✓Bull, base and bear cases — for each company
- ✓Downloadable reports — the full write-up for each, yours to keep
08Questions people ask
Is HDFC Bank or Kotak Mahindra Bank better value?
That turns on how far each share trades from its estimated fair value. Both figures, with every step of the working, are in the full valuations, free to view once you sign in. On the public numbers, HDFC Bank trades at 15.5 times earnings and 2.13 times book value, and Kotak Mahindra Bank at 22.6 times earnings and 2.68 times book value — but multiples alone mislead when two businesses work differently, which is why each is valued on the method that fits it.
What is the difference between HDFC Bank and Kotak Mahindra Bank?
HDFC Bank is India's largest private-sector bank, built on retail lending, low-cost current and savings deposits and a long record of keeping bad loans low. Kotak Mahindra Bank grew out of a finance company founded by Uday Kotak in 1985 and became a bank in 2003.
Are HDFC Bank and Kotak Mahindra Bank valued the same way?
Yes — both on excess return, so their workings compare like for like.
What does today's price assume for HDFC Bank and Kotak Mahindra Bank?
Worked backwards from the share price, HDFC Bank needs about 15.0% return on equity and Kotak Mahindra Bank about 16.3% return on equity, against 15.1% and 13.1% in their own records.