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The market asks roughly as much of HDFC Bank as of State Bank of India.
At current prices, buyers of HDFC Bank are assuming about 15.0% return on equity against 15.1% in its own record; for State Bank of India it is 14.8% against 16.1%. 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: the two are worth roughly the same on the stock market.
- Record: HDFC Bank has grown revenue faster: HDFC Bank compounded at about 22% a year (FY2019–FY2026) and State Bank of India at about 12% (FY2019–FY2026).
- What to watch: return on equity at HDFC Bank; return on equity versus its own history at State Bank of India.
| HDFC Bank | State Bank of India | |
|---|---|---|
| Price | ₹804 | ₹1,080 |
| Market cap | ₹12.40L Cr | ₹9.97L Cr |
| P/E | 15.5 | 11.0 |
| P/B | 2.13 | 1.62 |
| 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.
The bank the whole country runs on
State Bank of India is the country's largest bank by deposits, loans, branches and customers, and it is majority-owned by the Government of India. It lends to everyone from farmers and home buyers to the largest corporates, and its group includes SBI Life, SBI Card, the SBI Mutual Fund asset manager and SBI General Insurance.
02The records side by side
HDFC Bank has grown revenue faster: HDFC Bank compounded at about 22% a year (FY2019–FY2026) and State Bank of India at about 12% (FY2019–FY2026). By revenue, State Bank of India is about 1.4 times the size of HDFC Bank. HDFC Bank kept 15.3% of revenue as net profit in FY2026; State Bank of India kept 12.0% of revenue as net profit in FY2026.
Full ten-year tables and charts are on each company's page: HDFC Bank · State Bank of India.
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 its own historySBI's value depends on whether recent returns hold through a full credit cycle — something it has not shown before.
- Credit costsBecause the book is so large, even a modest rise in fresh bad loans would show up quickly in profit.
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.
- A turn in corporate creditSBI's history shows how fast large-company defaults can erase years of profit.
- Staff and pension costsWage settlements at a public-sector bank are less flexible and can lift costs in step.
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 State Bank of India 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 State Bank of India at 11.0 times earnings and 1.62 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 State Bank of India?
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. State Bank of India is the country's largest bank by deposits, loans, branches and customers, and it is majority-owned by the Government of India.
Are HDFC Bank and State Bank of India 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 State Bank of India?
Worked backwards from the share price, HDFC Bank needs about 15.0% return on equity and State Bank of India about 14.8% return on equity, against 15.1% and 16.1% in their own records.