HDFC Bank Shares Jump As Q2 Results Impress Investors, Analysts

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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