HDFC Bank gains over 3% post Q2 show; Goldman Sachs sees potential upside of 28%

Shares of the country's leading private-sector lender- HDFC Bank in Monday's session (October 21) recorded stellar gains of over 3 per cent after its Q2FY25 performance was reported on Saturday. The stock at the day's high scaled levels of Rs 1,734.45, while at around 9:32 am it was up 2.93 per cent or Rs 49.3 at Rs 1,730.45 apiece.

As per Zee Business Research inputs, the private bank largely posted steady results with standalone net profit for the July-September quarter increasing 5.3 per cent on-year to Rs 16,821 crore. For the review period, Zee Business analysts expected profit to come in at Rs 16,292 crore.

The lender said its net profit grew 17 per cent over the year-ago period when adjusted for trading and mark-to-market (MTM) gains as well as tax credits.

The net interest income (NII)- the difference between the interest paid and interest earned also edged higher by 10 per cent on-year to Rs 30,113 crore. 

Meanwhile, the key profitability metric- net interest margin (NIM), however, took a marginal hit and stood at 3.46 per cent versus 3.47 per cent in the year-ago period. 

HDFC Bank asset quality

Asset quality at the lender registered a slight hit during Q2 as its gross non-performing assets (GNPAs) stood at 1.36 per cent as a percentage of total loans for the September quarter as against 1.33 per cent for the previous three months, while net non-performing assets (NNPAs) worsened to 0.41 per cent from 0.39 per cent.  

Here's how global brokerages view HDFC Bank after its Q2FY25 show

Goldman Sachs remained positive on the outlook of the stock and maintained a 'buy' call with a raised target of Rs 2,150 from the earlier Rs 1,961 per share, implying gains of around 28 per cent from the previous close.

The brokerage maintained that the private lender posted in-line core operating profits & a slight beat on PAT during the review period with strong quality & better visibility of earnings. Also, the brokerage underlined that the bank's management laid out a forward path in terms of credit growth as it consolidates the Loan-Deposit ratio further.

CLSA, the Hong Kong-based brokerage, meanwhile continued with its hold call on the stock and raised the target to Rs 1,785 per share from the earlier Rs 1,725.

JP Morgan also raised its target on the stock to Rs 1,750 while maintaining 'neutral' rating, The lender's 2Q PAT at Rs168bn (+5% y/y; ROE: 14.6%) was 3 per cent ahead of JPMe aided by reversal of AIF-related provisions. Adjusted for this, core net income, however, was inline. Also, core PPOP growth was better at 13 per cent year-on-year.

Macquarie maintained its outperform view with a target of Rs 1,900 per share on the stock.