LIC gets RBI nod to raise HDFC Bank stake to 9.99%; shares gain over 1%

Shares of HDFC Bank and Life Insurance Corporation of India (LIC) edged higher in early trade on Thursday after the Reserve Bank of India (RBI) approved the state-owned insurer’s proposal to increase its stake in the private-sector lender to up to 9.99%.

Cheering the news, HDFC Bank shares rose as much as 1% to ₹728 on the BSE, while its market capitalisation climbed to ₹11.20 lakh crore. LIC shares, meanwhile, were up 0.21% at ₹413.85, with a market capitalisation of ₹5.23 lakh crore.

The approval allows LIC to raise its holding from the current 4.11% to as much as 9.99% of HDFC Bank’s paid-up share capital or voting rights.

In an exchange filing after market hours on Wednesday, HDFC Bank said that the RBI, through a letter dated August 19, had approved LIC’s application to acquire an aggregate holding of up to 9.99% in the bank.

“As per the latest available beneficial position i.e. as on August 14, 2026, LIC holds 4.11% of the total share capital of the Bank,” HDFC Bank said in its exchange filing.

The approval is subject to various regulatory conditions, including compliance with the Banking Regulation Act, 1949, the RBI’s Commercial Banks—Acquisition and Holding of Shares or Voting Rights Directions, 2025, the Foreign Exchange Management Act, 1999, and applicable Securities and Exchange Board of India (SEBI) regulations.

For the first quarter ended June 30, 2026, HDFC Bank reported standalone net profit of ₹19,059.72 crore, up 4.98% from a year earlier, although it was below Street expectations. Net interest income (NII) increased 6.7% year-on-year to ₹33,535.95 crore, while net interest margin (NIM) stood at 3.26%. Gross and net non-performing asset (NPA) ratios remained stable at 1.17% and 0.41%, respectively.

Despite the muted quarterly performance, most brokerages retained their positive stance on the stock, arguing that the current weakness is cyclical rather than structural.

Anand Rathi reiterated its ‘Buy’ rating with a target price of ₹963. While the brokerage acknowledged that HDFC Bank continues to lag peers such as ICICI Bank on loan growth, margins and the CASA ratio, it believes the lender remains well placed to benefit from favourable sector trends and attractive valuations.

Motilal Oswal also reaffirmed its ‘Buy’ call but cut its earnings estimates for FY27 and FY28 by 2% each. The brokerage believes the maturity of high-cost borrowings over the next two years, coupled with better operating leverage, should help improve margins and profitability despite the downward revision to its earnings forecasts.

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