HDFC Bank tumbles 9% post-Q3 results; what's hurting the sentiment?

HDFC Bank results, HDFC Bank share price today, HDFC Bank share price target: HDFC Bank shares on Wednesday, January 17, took a heavy beating in the opening deals and were the biggest contributor to the market's sharp decline, a day after the banking behemoth posted flat margins for the second consecutive quarter. Moreover, concerns over the loan-to-deposit ratio grew in its financial results for the quarter ended December 31, 2023 (Q3 FY24).

The HDFC Bank stock declined by as much as nine per cent, to Rs 1,528.4 apiece on NSE during the session. The counter settled as the Nifty 50's top loser, down by Rs 137 or 8.16 per cent at 1,542.15 on NSE. The country's largest private sector lender reported a standalone net profit of Rs 16,372.5 crore for the October–December period, in line with Street estimates.

The lender's quarterly net profit increased by 33.5 per cent on a year-on-year (YoY) basis, according to a regulatory filing. HDFC Bank said its net interest income (NII)—or the difference between interest earned and interest paid—grew 23.9 per cent to Rs 28,470 crore for the three-month period.

The core net interest margin (NIM)—a key measure of profitability for financiers—stood at 3.4 per cent based on total assets and 3.6 per cent based on interest-earning assets, it added.

HDFC Bank said its total deposits stood at Rs 22,14,000 crore and gross advances at Rs 24,69,300 crore as of December 31, 2023, up 27.7 per cent and 62.4 per cent on a year-on-year basis, respectively.

Better asset quality 

The bank staged an improvement in its asset quality. Its gross NPAs came down to 1.26 per cent and net NPAs to 0.31 per cent, as of December 31, from 1.34 per cent and 0.35 per cent, respectively, three months ago, according to the filing. Read more on HDFC Bank Q3 results

HDFC Bank Q3 results review

Zee Business Managing Editor Anil Singhvi has a 'sell' call on HDFC Bank futures with a stop loss of Rs 1,700 for targets of Rs 1,640, Rs 1,615, and Rs 1,590. He highlights the following key points:

• Extremely weak performance
• Short only if the stock doesn't make a big gap-down opening;
• The loan-to-deposit ratio is a big concern for the market.

HDFC Bank share price target 2024: Should you buy, sell or hold?

CLSA has maintained a buy call on HDFC Bank. The brokerage has raised the target on the stock to Rs 2,025 from Rs 1,900, the highest among its peers. Calling it a mixed quarter for HDFC Bank, the ability to raise deposits and the NIM trajectory remain two key things to monitor, according to the brokerage.

Jefferies, Citi, and HSBC too have a buy-call each. While Jefferies has reduced the target by Rs 100 to 2,000, Citi too has reduced the target to Rs 2,100 from Rs 2,110, and HSBC has reduced the target to Rs 1,950 from Rs 2,080.

According to Jefferies, flat NIMs, even as the impact of ICRR and surplus liquidity receded, were the key miss in QoQ, Jefferies added in its note.

Morgan Stanley has continued an overweight rating with a target price of Rs 2,110.

According to the brokerage, PAT was 4 per cent above estimates due to a lower tax rate. Credit cost was in line, adjusted for one-offs; NIl growth was also in line. The key negative was a lower LCR QoQ of 110 per vs. 121 per cent. This could delay growth and margin improvement and cut FY25 and FY26 EPS estimates by 3 per cent each, the brokerage said.

JP Morgan, too, has maintained an overweight rating on the stock with a target price of Rs 1,900. Moreover, Macquarie has maintained an outperform rating with a target price of Rs 2,075.

In addition, independent market expert Ambareesh Baliga on Zee Business recommended buying HDFC Bank shares at current levels.

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