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HDFC Bank Q4 results tomorrow: Lender expected to post strong PAT growth, comments on merger eyed

India’s largest private sector lender HDFC Bank will announce its January-March quarter results tomorrow. Investors will be patiently waiting for the quarterly performance of the bank that has an 11% market share, second only to the State Bank of India (SBI).

India’s largest private sector lender HDFC Bank will announce its January-March quarter results tomorrow. Investors will be patiently waiting for the quarterly performance of the bank that has an 11% market share, second only to the State Bank of India (SBI). The lender is expected to post strong growth in profit with various analysts expecting an 18-30% on-year growth. Provisions are likely to be reduced and loans are anticipated to grow. HDFC Bank’s results will also be eyed as the lender has proposed a merger with Housing Development Finance Corporation (HDFC) — a move that is likely to increase the bank’s market share.

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Net profit expectations

Motilal Oswal: Rs 9,690 crore
Up 18.4% on-year growth; down 6.2% sequentially

Edelweiss: Rs 10,183 crore
Up 24% from the previous year; down 2% on-quarter basis

Axis Securities: Rs 10,378 crore
Up 26.8% on-year basis; 0.3% growth from the previous quarter

Kotak Securities: Rs 10,478.20 crore
Up 19% on-year basis; 1.3% growth sequentially

Yes Securities: Rs 11,298.10 crore
Up 38% on-year and 9.2% from the previous quarter

Net interest income expectations

Motilal Oswal: Rs 19,380 crore
Up 13.2% on-year basis and 5% growth on-quarter

Axis Securities: Rs 19,458 crore
Up 13.7% on-year basis and 5.5% on-quarter basis

Edelweiss: Rs 19,550 crore
Up 14% on-year basis and 6% from the previous quarter

Yes Securities: 19, 636.80 crore
Up 14.7% on-year basis and 6.5% growth on-quarter

Kotak Securities: 19,776 crore
Up 15.5% on-year and 7.2% on-quarter

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Provision expectations

Kotak Securities: Rs 3,134.90; Down 33.2% from last year
Axis Securities: Rs 3,795 crore; Down 19.1% on-year
Edelweiss: Rs 3,300 crore; down 21% on-year

What to watch out for

HDFC Bank will be the first among major lenders to report its quarterly earnings. Analysts at Motilal Oswal said that HDFC Bank’s commentary around credit cards and fee income traction is a key monitorable. Meanwhile, analysts at Axis Securities are watching HDFC Bank’s growth outlook on each segment along with commentary on the credit card segment. The lender’s loan book is seen to have reached Rs 13.69 lakh crore in the January-March quarter. 

Management’s comments on the proposed merger will be the key thing to watch. The amalgamation of HDFC and HDFC Bank is expected to lead to a diversification of the business profile of the bank, according to S&P Global. “The combined entity’s earnings could improve over the next three to five years. The merger will provide the bank with profitable cross-selling opportunities to HDFC Ltd.’s large pool of customers, especially for high-yield products such as unsecured loans. It would also generate more fee income from insurance and investment products,” they said earlier last week.

HDFC Bank remains a ‘Buy’ call for Motilal Oswal, Edelweiss, and Axis Securities.

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