HDFC Bank Share Price Is Back Near 2020 Levels. What Happened to Six Years of Returns?

India’s largest private sector lender, HDFC Bank, has grown sharply in size since 2020. Its stock, however, tells a very different story.

HDFC Bank share price is back around ₹750, close to its late-2020 price zone, even after the bank absorbed HDFC Ltd, expanded its balance sheet and went through a major management transition.

The shares rose 1.18% to ₹748.25 on September 22, extending gains for a second session. The stock remains about 27% below its 52-week high of ₹1,020.50 and is sharply lower in 2026.

The 2020 comparison needs some adjustment because HDFC Bank issued a 1:1 bonus in August 2025, doubling its paid-up equity capital. Even so, the stock's performance raises a question investors have been asking for some time: why has HDFC Bank struggled to sustain a higher valuation despite becoming a much larger bank?

What Changed After the Merger

The biggest change came in April 2022, when HDFC Bank announced its merger with HDFC Ltd. The stock initially jumped as much as 14% after the announcement as investors focused on the scale of the combined business. That enthusiasm faded in the months that followed. Concerns over the size of the transaction, integration and the effect on HDFC Bank's margins weighed on the shares.

The initial reaction in HDFC Bank stock was strong. But the excitement did not last. As investors began to focus on the size of the transaction, the integration process and the effect on near-term profitability, the shares gave back much of their initial gains.

The merger became effective on July 1, 2023, with HDFC Bank issuing 42 shares for every 25 shares held in HDFC Ltd. The combined bank emerged with a substantially larger balance sheet and a broader financial-services footprint.

For the stock, however, scale was not enough. The market shifted its attention towards the harder part of the merger: how quickly the enlarged bank could grow deposits, protect margins and translate the additional scale into earnings.

That pressure became visible in 2024. HDFC Bank shares came under pressure as investors focused on weaker net interest margins and the earnings impact of the post-merger balance-sheet transition. The stock's performance increasingly depended on whether the bank could rebuild profitability without sacrificing growth.

HDFC Bank Stock: From 2025 Rally to 2026 Sell-off

HDFC Bank stock eventually found some relief in 2025. The shares climbed to ₹1,020.50 in October, their 52-week high, as expectations around growth and the post-merger recovery improved.

But that recovery has since reversed. HDFC Bank entered 2026 with pressure around growth, margins and the pace at which the benefits of the merger would show up in returns. The leadership transition then added another layer of uncertainty.

Chairman Atanu Chakraborty resigned in March, while CEO Sashidhar Jagdishan said in August that he would not seek a third term. His tenure is due to end on October 26, 2026. Reuters reported that the stock fell to a 30-month low after the announcement and was down 28.5% for the year as of August 31.

The immediate market reaction has improved in September as investors await clarity on the successor. HDFC Bank shares have risen for two consecutive sessions and touched ₹748.80 intraday on September 22 amid expectations of an announcement on the new CEO. Even after that bounce, the stock remains about 25% lower in 2026.

The contrast is telling: the stock can still respond sharply to changes in expectations, but investors have not yet given the bank the sustained re-rating that its larger scale might have suggested.

Why HDFC Bank Shares Have Struggled to Re-rate

The issue for HDFC Bank stock is no longer simply size. It is the return that investors can expect from that larger balance sheet.

The merger created significant scale, but it also changed the earnings profile of the bank. Deposit mobilisation, loan growth and net interest margins have become more important to the valuation debate as HDFC Bank works through the post-merger balance sheet.

At the same time, the stock has faced a succession of questions beyond quarterly earnings, including governance and leadership changes. Reuters noted that Jagdishan's exit followed Chakraborty's resignation earlier in the year, while a legal review found no wrongdoing related to the chairman's departure.

That combination has kept investors focused on execution rather than simply assigning a premium to HDFC Bank's franchise.

The valuation reflects some of that change. HDFC Bank is now trading at around ₹748, well below its 2025 high, with the stock's 52-week range standing at ₹681.90 to ₹1,020.50.

What Investors Are Watching Now

For HDFC Bank share price, the next phase is likely to depend on three things: the new CEO's appointment, the recovery in margins and the bank's ability to deliver stronger deposit and loan growth without weakening returns.

The leadership decision is the immediate trigger. The market will also look beyond the appointment to whether the new management can provide a clearer path for the enlarged bank's earnings and return ratios.

That is ultimately the bigger question behind HDFC Bank's six-year stock journey. The bank today is much larger than it was in 2020 and has a significantly broader financial-services franchise. But for the stock to move into a sustained new valuation range, investors will need to see that additional scale translate into stronger and more predictable returns.

Until then, HDFC Bank's share price remains a story less about how much the bank has grown and more about how much of that growth the market is willing to pay for.

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