Stock to buy: Why HDFC Bank is a must-have stock in your portfolio? Explained

Stock to buy for long term: For long-term investors, HDFC Bank continues to stand out as one of the most reliable wealth creators in the Indian stock market. While recent returns may seem muted at a glance, a broader perspective highlights a powerful story of consistency, resilience, and long-term compounding that few stocks have been able to match.

The private bank’s performance over the past decade reinforces its credibility. HDFC Bank delivered a robust 12.4% return in 2016, followed by an exceptional 55% rally in 2017. This momentum continued with gains of 13.3% in 2018 and 20.9% in 2019, showcasing its ability to generate strong returns across different market environments. Even during volatile phases, such as 2020, the stock held firm with a 12.9% gain.

Post-2020, as well the returns remained positive—3% in 2021 and 10% in 2022—demonstrating the bank’s defensive strength. The trend continued with 5% returns in 2023 and 3.7% in 2024.

The rebound in 2025, with a 12% gain, signalled renewed investor confidence. However, in 2026 year-to-date, the lender declined 15% driven by broader global factors—particularly geopolitical tensions in the Middle East and risk-off sentiment—rather than any deterioration in HDFC Bank’s fundamentals. In fact, such corrections have historically presented attractive entry opportunities in high-quality names.

Overall, benchmarks Sensex and Nifty 50 have lost over 7% each since the start of the US-Iran war. The conflict has entered its third week, and the trade through the Strait of Hormuz, a vital artery for global oil and gas shipments, has come to an effective halt.

Market movements have largely been driven by oil prices, which have surged from around USD 70 per barrel before the United States and Israel launched attacks on Iran. In response, Iran has nearly halted traffic through the Strait of Hormuz — a critical route through which about one-fifth of the world’s oil supply typically passes from the Persian Gulf to global markets. This disruption has led oil producers to cut output as supply routes remain constrained.

The key concern for financial markets is that a prolonged closure of the Strait could significantly reduce global oil supply, pushing inflation higher and posing a serious risk to the global economy.

Why you should still buy?

What strengthens the investment case further is the continued confidence shown by brokerages. Global firm CLSA has maintained an ‘Outperform’ rating on HDFC Bank with a price target of ₹1,200, indicating meaningful upside potential. The brokerage believes that market concerns around the bank’s loan-to-deposit ratio are overstated, especially as regulatory focus on this metric has eased.

CLSA expects the bank’s core pre-provision operating profit to grow at a compound annual growth rate of approximately 18% between FY26 and FY28, compared to 12% between FY24 and FY26. This acceleration in earnings is likely to act as a key catalyst for a potential re-rating of the stock.

From a valuation standpoint, HDFC Bank is currently trading at around 1.8 times its price-to-book value and about 13 times its one-year forward price-to-earnings ratio, added CLSA. These levels are relatively attractive compared to its historical valuations, suggesting that much of the near-term concerns are already priced in.

Similarly, Axis Securities also included HDFC Bank among its top large-cap picks, with a target price of ₹1,190—implying a potential upside of around 34% from current levels.

Disclaimer: 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.