HDFC Bank Stock Price: HDFC Bank shares continue to rise even today after the quarterly results. Today the share strengthened by about 1 percent and reached Rs 1687, whereas on Wednesday it had closed at Rs 1666. The brokerage house believes that the December quarter for the bank has been as expected. Despite the challenges, asset quality has remained almost stable. Net profit and income have improved. At present, after the quarterly results, Brokerage House is bullish on the stock of HDFC Bank. HDFC Bank’s net profit for the three months ending December 2024 increased by 2.2% to Rs 16,736 crore. During this period, the bank’s revenue increased by 6.3% to Rs 42,110 crore. Besides, Net Interest Income (NII), which is the main income of the bank, increased by 7.7% to Rs 30,650 crore.
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5 reasons behind strong outlook
1. Gradual retirement of high-cost borrowings, as well as improvement in operating leverage, will support return ratios in the coming years.
2. The bank’s earnings have been as expected. HDFC Bank has healthy provisions (floating + contingent) of Rs 259 billion, which is 1 percent of total loans.
3. The bank has reported in-line earnings in Q3FY25 with better-than-expected core slippage, lower LDRs and substantial gains in deposit market share.
4. This is the first quarter of PSL for e-HDFC and the bank managed it easily amid fears of a miss.
5. Slippage (except agriculture) remained stable quarter on quarter while including agriculture it increased by 13% quarter on quarter. Even with agriculture, the total backward slippage ratio at 1.4% remains the lowest compared to private piers.
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Brokerage House Motilal Oswal
Brokerage house Motilal Oswal has given Buy rating on HDFC Bank shares and has kept a target price of Rs 2050. This is 23 percent more than the current price of Rs 1666. The brokerage house says that the bank’s earnings have been as expected. Whereas the margin has decreased by 3 basis points on a quarterly basis. Deposit growth remained strong, while advances growth remained sluggish, which is in line with the bank’s strategy to rapidly reduce the CD ratio. CASA ratio also decreased to 34 percent. There was a slight decline in the asset quality of the bank, while the PCR decreased to 67.8 percent. However, HDFC Bank has healthy provisions (floating + contingent) of Rs 259 billion, which is 1 per cent of total loans.
Due to the bank’s focus on reducing CD ratio at accelerated rates, the brokerage estimates loan growth to decline by 5% and 10% in FY25 and FY26. However, gradual retirement of high cost borrowings, as well as improvement in operating leverage, will support return ratios in the coming years. The brokerage has cut its earnings estimates for FY26/27 by 3 per cent, reflecting sluggish loan growth and CASA moderation. The brokerage estimates that the bank’s RoA and RoE could be 1.8% and 13.9% during FY26E.
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Brokerage House Nuwama
Brokerage house Nuvama has also given BUY rating on HDFC Bank shares and has kept the target price at Rs 1950. This is 17 percent more than the current price of Rs 1666. The brokerage says HDFC Bank has reported in-line earnings in Q3FY25 with better-than-expected core slippage, lower LDRs and substantial gains in deposit market share. This is the first quarter of PSL for e-HDFC and the bank managed it easily amid fears of a miss.
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Slippage (except agriculture) remained stable quarter-on-quarter, while including agriculture it increased by 13% quarter-on-quarter. Even with agriculture, the total backward slippage ratio at 1.4% remains the lowest compared to private piers. The brokerage believes that with consistently positive results on asset quality in a tough macro, substantial gains in deposit market share, consistent improvement in LDRs and core margins in line with expectations, HDFC Bank has delivered a strong quarter.
(Disclaimer: The advice to invest in stocks is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing)
