HDFC Bank’s share price jumped back in the green early on Tuesday after the company posted its results for the quarter ended September.

What Happened: In the July-September 2023 quarter, HDFC Bank’s net profits stood at ₹15,976 crore. In the reporting quarter, the bank’s net interest income – the difference between the income a bank makes from its lending activities and the interest it pays to depositors – reached ₹27,385 crore. The reported net interest margin (NIM) for the banking behemoth in the July-September quarter was 3.4%.

These figures are not directly comparable to last year/quarter’s numbers due to the merger of HDFC Ltd into the bank, which took place on July 1 of this year. However, the lender’s bottom line did beat analyst’s estimates of around ₹14,500.

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The merger had a noticeable impact on India’s largest private sector bank, particularly on its asset quality, which deteriorated due to bad loans in the non-individual loan segment of the former HDFC Ltd. During the July-September period, the gross non-performing assets (NPA) of the private lender amounted to ₹31,577.89 crore. This figure represents a notable increase compared to the same period in the previous year when it was at ₹18,301.00 crore. In the preceding quarter, the gross non-performing assets stood at ₹19,064.12 crore.

Analyst Reactions: Most analysts remained bullish on the stock. Jefferies maintained its “buy” rating on the stock with a price target of ₹2,030. The research firm said that while the bank’s loan growth was slow it has potential to grow. Morgan Stanley also maintained its “overweight” stance on the stock with a price target of ₹2,110. The analysts said that the company’s profit after tax beat its estimates by 12%.

HSBC also maintained its “buy” rating on the stock but cut the price target to ₹1,840 from ₹1,930. Citi also maintained the “buy” call for the stock with a target price of ₹2,110. The firm said that the estimate beating profits were a result of non-interest income, lower credit costs and tax reversals.

Price Action: HDFC’s share price was up 1.02% to trade at ₹1,545.20 at open on Tuesday.

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