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Jefferies has doubled down on its bullish stance on HDFC Bank, calling valuations “attractive” after a sharp 25% year-to-date slide in the stock and reiterating the lender as one of its top sector picks. The brokerage has a “Buy” rating on HDFC Bank with a target price of Rs 1,240, implying an upside of 64% from the previous close of Rs 756.25, and sees the bank’s American Depositary Receipt (ADR) climbing 50% to 40 dollars.Jefferies analysts Prakhar Sharma and Vinayak Agarwal note that HDFC Bank’s share price is down 25% so far in 2026, underperforming peers amid concerns around the exit of its chairman and the potential impact of the West Asia conflict. “Now, valuations at 1.6x FY27E adjusted P/B, 13x PE are at a discount to large private banks and at a low premium to peers,” Jefferies writes, arguing that the derating has overshot fundamentals.During the day, HDFC Bank shares were trading around 2% lower at Rs 744 on BSE. Last week, Jefferies’ top equity strategist Christopher Wood announced in his 'GREED & fear' newsletter that he is exiting HDFC Bank from both his Asia ex-Japan and global long-only equity portfolios.Also Read | Jefferies' Chris Wood sells HDFC Bank after Chairman's puzzling exit, cuts India weightageWhile Wood stopped short of clarifying the reason behind the exit, former bureaucrat Atanu Chakraborty's resignation letter last week as the chairman of HDFC Bank worried investors, as he cited "certain happenings and practices within the bank" that he said were "not in congruence" with his personal values and ethics.However, looking beyond the crisis, Jefferies contends that the current multiples are compelling given HDFC Bank’s “stronger asset quality, healthy growth and ROE” and that its sensitivity to higher credit costs and lower topline is “manageable”.Key things that Jefferies said on HDFC Bank in its latest reportFor FY27, Jefferies forecasts a return on assets of 1.7% and a return on equity of 14%, with gross non-performing assets at 1.2% and net NPAs at 0.4%, alongside a capital adequacy ratio of 19%.“It is among our sector top picks,” the report says, placing HDFC Bank in the same preferred bucket as ICICI Bank, Axis Bank, and Kotak Mahindra Bank within private lenders.Jefferies’ base-case scenario builds in a 13% compound annual growth rate in loans over FY26-28, average net interest margins of around 3.5%, and stable asset quality metrics, and values the core bank at 2.5 times adjusted book for March 2028.The sum-of-the-parts framework pegs the standalone bank’s value at Rs 1,110 per share and group subsidiaries such as HDFC Life, HDFC AMC, HDB Financial, HDFC Ergo, and HDFC Securities at another Rs 131 per share, taking the consolidated fair value to Rs 1,240.On the risk side, Jefferies flags that clarity on “board issues and rollover of CEO term / Chairman appointment can aid rerating,” implicitly acknowledging that governance overhangs have weighed on sentiment. It warns that a spike in interest rates could hurt, as the merged entity now has a higher share of non-retail funds and its cost of funding is more closely linked to market rates than in the past. A slower ramp-up in priority-sector lending could also drag margins and ROA through higher compliance costs.Even so, Jefferies sees the headwinds as transient against the merger-led structural positives. The house expects synergies from the HDFC Ltd amalgamation to flow through in the form of cross-selling opportunities, better service and operational efficiencies. It also believes that continued branch expansion will support the deposit mobilisation needed to fuel loan growth.It also points out that while HDFC Bank’s loan-to-deposit ratio at 99% (3QFY26) is among the highest in the peer set, its liquidity coverage ratio of 116% remains healthy, suggesting that balance-sheet risks are contained.Jefferies underlines that the current correction has pushed HDFC Bank below its own historical valuation bands. The stock now trades under its long-term average one-year forward price-to-earnings and price-to-adjusted-book multiples, even as the bank is projected to deliver net profit growth of 11% in FY26 and 7% in FY27, and to lift earnings per share from Rs 49 in FY26 to Rs 52 in FY27 and Rs 60 in FY28.

Banking stocks plunged up to 3% on Monday as investors fled on fears that the Reserve Bank of India's emergency forex restrictions could trigger mark-to-market losses of up to Rs 4,000 crore in the current quarter.Nifty Bank tumbled 2.5%, with private lenders Axis Bank, Kotak, and IndusInd leading the rout with 3% losses, while ICICI Bank, HDFC Bank and SBI fell around 2% each. The selloff came even as the rupee surged nearly 1% to 93.85 per dollar, recovering from Friday's record low of 94.84, after the RBI tightened limits on banks' foreign exchange positions.The central bank's directive, effective April 10, caps banks' net open positions in the rupee at $100 million at the end of each business day, forcing lenders to dismantle massive arbitrage trades estimated at $25-50 billion."Every Rs 1/USD dual movement in INR on $30-40 billion of book can lead to a one-time loss of Rs 30-40 billion for the banking sector," warned Prakhar Sharma and Vinayak Agarwal of Jefferies, who estimate gross onshore positions at $30-40 billion, dominated by major lenders including SBI, ICICI, HDFC, Axis, and leading foreign banks.The analysts flagged that unwinding positions by April 10 may lead to MTM losses in the fourth quarter. "This may have an impact on banks' profit in 4QFY26 as they may need to take MTM hit on March 31, 2026," they wrote, adding that the sector has sought leniency from the RBI.Traders said if the gap between rupee-dollar rates in the offshore non-deliverable forwards market and the onshore market widens to Re 1 during unwinding, banks could face losses of up to Rs 4,000 crore. These losses could be reflected in banks' books for the current fiscal year, as they had earlier calculated open positions after netting off hedged trades in the NDF market.The potential hit stems from how banks structured their forex operations. "The normal trade is for banks to buy US$ in the onshore market (at a lower premium) and sell or square off in the offshore market (at a higher premium) to generate a spread and build depth in the market," the Jefferies analysts explained. The spread had widened significantly amid volatility and the rupee's fall on heightened risk aversion and oil-driven pressures linked to the Iran war.Banks are lobbying for relief. "Our conversations with banks indicate that RBI is considering some leniency that may include grandfathering of existing contracts and applying limits on new contracts," the Jefferies analysts wrote. "It may also consider extending the time limit from April 10 to a further date to smoothen forex movement and MTM impact on banks."Most large and mid-sized banks with net open positions exceeding $100 million are expected to sell dollars to comply with the directive, triggering a wave of onshore dollar selling as they rush to cut arbitrage positions.But prominent fund manager Samir Arora dismissed the panic. "Just relax about this supposed Rs 4,000 crore loss on FX unwinding," he tweeted. "Just in the past month the INR has depreciated by over 4%. All these positions would not have been set up for the first time at the Friday, March 27 close. These banks would be in the money big time till now (which equity markets did not know or account for), and now they will give up some of those profits. Big deal."Arora suggested foreign banks may bear much of the impact: "Some of the bigger positions may have been taken by more aggressive foreign banks (like Citi etc), who knows, but we do not care beyond a point for them as far as our market is concerned."The Jefferies analysts noted that appreciation of the rupee in the NDF market may lead to profits for hedge funds and foreign banks in the forex derivative markets, a reversal that could benefit offshore players even as Indian banks take losses. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

JSW Steel on Monday said Japan’s JFE Steel Corporation has invested Rs 7,875 crore in its subsidiary JSW Kalinga Steel , acquiring a 25% stake and triggering joint control of the venture.The investment marks the first tranche of JFE’s planned stake buy in JSW Kalinga, with 2,26,94,524 equity shares allotted to the Japanese steelmaker on March 30, 2026, the company said in a filing.Also Read: JSW Steel to develop coking coal mine in MozambiqueFollowing the allotment and board reconstitution under the joint venture agreement signed in December 2025, JSW Steel and JFE now jointly control JSW Kalinga and its wholly owned arm, JSW Sambalpur Steel Limited.JFE is slated to acquire another 25% stake in JSW Kalinga for Rs 7,875 crore in the next tranche, in line with the agreement.Also Read: Steel Ministry flags industry concerns over LPG suppliesThe transaction is part of a broader partnership between the two companies to expand their footprint in India’s steel sector.JSW Steel share price was last trading 0.1% higher at Rs 1,131.7, as of 09:43 a.m.