HDFC Bank’s share price gained over 2% as the private sector lender reported a standalone net profit of Rs 16,175 crore for the quarter ended June 30, 2024, marking a 35% increase from Rs 11,952 crore in the same period last year.
HDFC Bank share price gained over 2% in early trade on Monday after the country’s largest private sector bank reported its earnings for the fiscal first quarter ended June 2024. The share price of HDFC Bank 2.71% to intra-day high of Rs 1651 on NSE.
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Q1FY 25 Performance
HDFC Bank reported a standalone net profit of Rs 16,175 crore for the quarter ended June 30, 2024, marking a 35% increase from Rs 11,952 crore in the same period last year. However, this figure was down by 2% sequentially from Rs 16,512 crore reported in Q4FY24.
The largest private lender’s interest income for the reported quarter stood at Rs 73,033 crore, up 50% year-on-year from Rs 48,587 crore in the corresponding quarter of the previous financial year. Gross advances as of June 30, 2024, were Rs 24,86,900 crore, marking a 52.6% increase year-on-year.
HDFC Bank’s net interest income for the quarter grew 26.4% to Rs 29,840 crore, compared to Rs 23,600 crore in the quarter ended June 30, 2023. The core interest margin was reported at 3.47% on total assets and 3.66% based on interest-earning assets.
Provisions and contingencies for the April-June period were Rs 2,600 crore, down from Rs 2,860 crore in the corresponding quarter of the previous year.
As of June 30, 2024, the bank’s total balance sheet size was Rs 35,67,200 crore, up from Rs 25,01,700 crore a year earlier. Total deposits stood at Rs 23,79,100 crore in Q1FY25, reflecting a 24.4% year-on-year increase. CASA deposits grew by 6.2%, with savings account deposits at Rs 5,96,400 crore and current account deposits at Rs 2,67,300 crore.
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Brokerages on HDFC Bank
Jefferies on HDFC Bank
Jefferies has maintained a “Buy” rating on HDFC Bank and raised its target price to Rs 1,890 from Rs 1,880, according to their latest report. The report highlights that the expansion in margins is a positive development, offsetting the softer balance sheet growth.
Slippages have increased, largely due to seasonal non-performing loans (NPLs). Additionally, earnings from HDB Financial Services have softened due to lower net interest margins (NIMs).
Goldman Sachs on HDFC Bank
Goldman Sachs has maintained a “Buy” rating on HDFC Bank and increased its target price to Rs 1,961 from Rs 1,927, according to their latest report. The report notes a strong operational performance in Q1, with improving earnings visibility.
Asset quality remains excellent, with GNPA% and slippage ratios better than estimates. Goldman Sachs expects a rebound in core PPOP ROA from approximately 2.5% in FY24 to 2.9% in FY26E.
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Nuvama on HDFC Bank
Nuvama has maintained a “Buy” rating on HDFC Bank with a target price of Rs 1,850, according to their latest report. The report highlights that net interest margin (NIM) expansion is driven by a higher share of retail loans and increased liquidity coverage ratio (LCR).
The CEO reiterated that while there is no regulator-imposed loan-to-deposit ratio (LDR), the bank is likely to lower its LDR sooner. Asset quality remains strong, according to the report.
Motilal Oswal On HDFC Bank
Motilal Oswal maintains a “Buy” rating on HDFC Bank, highlighting an in-line performance characterized by slight margin improvement and controlled provisions. Business growth was tepid in Q1, with loan growth declining 1% QoQ due to wholesale.
Asset quality showed marginal deterioration, while the provision coverage ratio (PCR) moderated by 280 basis points QoQ to approximately 71.2%. However, HDFC Bank maintains a healthy pool of provisions (floating and contingent) at INR 269 billion, or 1.1% of loans.
The bank has not provided specific guidance on the credit-to-deposit (C/D) ratio, but management indicated a focus on reducing this ratio at an accelerated pace. Consequently, Motilal Oswal models some moderation in loan growth for FY25 and FY26.
The gradual retirement of high-cost borrowings, along with improved operating leverage, is expected to support return ratios in the coming years.
Motilal Oswal estimates HDFC Bank to achieve a 16% CAGR in deposits and a slower 10.1% CAGR in loans over FY24-26. They project an FY26 RoA/RoE of 1.9%/15.1% and reiterate their “Buy” rating on the stock.
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