Q2 profit rose 20 percent, yet the ADS at $29.48 already pays about 17 times this year’s earnings. A $31 target is a market-like return, including the dividend.
Key points
- ₹14,843 crore Q2 standalone profit, up 20.1 percent year over year.
- 24.1 percent loan growth excluding FCNR-linked international books; headline loans +30 percent.
- 4.18 percent net interest margin, down from 4.36 percent in June; management sees more December pressure.
The call
The $29.48 ADS requires about 17 times this year’s $1.72 of earnings (two ordinary shares, ₹95.83 per dollar). That multiple already assumes profit keeps compounding near 18 percent after a one-off $18 billion foreign-currency deposit swap.
I model $1.88 of blended forward earnings and 16.5 times, a $31 share. Underlying credit demand is real, but mix and funding costs cap the multiple until margins stabilize in March.
Standalone profit after tax (₹ thousand crore)- Reported PAT
- My FY27 quarter run-rate
Company results through Q2 FY27; FY27E is this desk. Oct 17 2026.
Valuation
| Item | Figure |
|---|
| FY27 ADS earnings (my estimate) | $1.72 |
| FY28 ADS earnings (15% growth) | $1.98 |
| Blended 12-month earnings | $1.88 |
| Multiple | 16.5 times |
| 12-month target | $31.00 |
| Implied return from $29.48, plus $0.25 dividend | about 6 percent |
Sixteen-and-a-half times is a private-bank multiple when CET1 is 16 percent and net NPAs are 0.30 percent, not a growth premium. Upside if March margins recover; downside if FCNR assets stay low-spread. That is a market-like payoff, hence hold.
Net interest margin, percentCompany Q2-2027 review, Oct 17 2026. Desk path after management's December-then-March comment.
Risks
- December NIM falls more than 15 basis points and does not rebound in March.
- RBI keeps the ₹1,283 crore farm provision or tightens ECL from April 2027.
- Rupee weaker than ₹96 per dollar cuts the ADS translation.
What would change my mind
A March-quarter domestic margin back above 4.30 percent with loan growth still above 20 percent excluding FCNR would support a higher multiple.