HDFC Bank announced a significant increase in deposit market share, decreased LDR, and better-than-expected core slippage. Despite concerns of a miss, e-HDFC handled the first quarter of the PSL well, according to an analyst.
With strong deposit growth and moderate advances growth, HDFC Bank Ltd.’s Q3 results mostly matched analyst projections and supported the bank’s plan to lower the CD ratio quickly. A significant slowdown in loan growth resulted in a subdued 2.2% gain in profit. According to analysts, PCR dropped to 67.8%, while asset quality somewhat worsened. They mostly maintained their ‘Buy’ ratings for the stock.
According to MOFSL, HDFC Bank has a healthy Rs 25,900 crore in provisions, or 1% of total loans. The bank is accounting for a reduction in loan growth in FY25 and FY26 to 5% and 10%, respectively, due to its emphasis on lowering the CD ratio at an accelerated rate.
Return ratios will be supported in the upcoming years by the progressive retirement of expensive borrowings and an improvement in operating leverage. Due to slower loan growth and CASA reduction, we reduced our earnings estimates for FY26 and FY27 by 3% each. MOFSL stated, “Reiterate Buy with a target price of Rs 2,050.”
Nirmal Bang Institutional Equities stated that it maintains its long-term optimism on HDFC Bank because of its superior asset quality, growth prospects due to a strong capital position, and long-term merger synergies.
It also suggested a target price of Rs 2,073 and stated that a non-specific provision buffer of 1.4% of the loan book gives confidence.
HDFC Bank reported decreased LDR, a significant increase in deposit market share, and better-than-expected core slippage for Nuvama Institutional Equities. Despite concerns of a miss, e-HDFC handled the first quarter of PSL well, according to the brokerage.
Slippage (ex-agri) increased 13% QoQ while remaining level sequentially when agri was included. According to Nuvama, the total lagged slippage ratio, which is 1.4%, is still the lowest when compared to private rivals, even in the agricultural sector.
“We believe with back-to-back positive outcomes on asset quality in a tough macro, a substantial gain in deposit market share, consistent improvement in LDR and core margins in-line with expectations, HDFC Bank delivered a strong quarter; reiterate ‘BUY’ with an unchanged target of Rs 1,950,” Nuvama stated.
