HDFC Bank‘s share price was under pressure on Wednesday morning after a global brokerage firm downgraded the stock’s rating.

What Happened: BofA downgraded the stock’s rating to “neutral” from “buy” cutting the target price to ₹1,830 from ₹1,850. The analysts said that the HDFC Bank share price has seen a decent rally over the past few weeks driven by optimism regarding a likely increase in MSCI weightage. Due to this rally, the brokerage now expects the stock’s risk-reward to be in a narrow range over the coming year.

The analysts noted that navigating FY25 could be challenging for the lender. The brokerage noted that a shallow rate cut cycle would delay net interest margin (NIM) recovery, with significant catalysts expected to materialise only in FY26.

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Several other brokerages have also expressed concerns about the lender after it posted muted updates for the June quarter.

HDFC Bank reported a 52.6% year-on-year growth in gross advances, reaching ₹24.87 lakh crore. Excluding the impact of its merger, gross advances increased by 14.9% compared to the June 2023 quarter. Retail loans grew by about ₹18,600 crore, and commercial and rural banking loans rose by around ₹7,200 crore. In contrast, corporate and other wholesale loans declined by ₹26,600 crore compared to the end of March.

Price Action: HDFC Bank’s share price was down 0.29% to trade at ₹1,631.80 in early trade on Wednesday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.