HDFC Bank Shares In Red On Soft Q1 Business Update, But Brokerages Maintains Bullish Stance

Shares of HDFC Bank fell on Friday morning after the bank announced a soft first-quarter business update. However, brokerages maintained their bullish stance on the private lender.

What Happened: HDFC Bank reported a 52.6% year on year growth in gross advances to ₹24.87 lakh crore. Excluding the impact of its merger, its gross advanced jumped 14.9% from June 2023 quarter. 

Retail loans grew by about ₹18,600 crore, and commercial and rural banking loans rose by around ₹7,200 crore, while corporate and other wholesale loans declined by ₹26,600 crore versus March end.

The bank’s deposits stood at ₹23.79 lakh crore in the June quarter, which remained similar to the ₹23.80 lakh crore it had at the end of March. Its current and savings account (CASA) deposits were ₹8.6 lakh crore, up 6.2% from the previous year but down from ₹9.08 lakh crore at the end of March due to current account balances reducing by ₹42,500 crore.

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Brokerage Views: Jefferies maintained a "buy" call with a target price of ₹1,880. In the first-quarter business update, the soft deposit mobilisation was slightly disappointing. Retail, small and medium enterprises and rural loans led the growth. The brokerage said the key trends to watch in the upcoming results are the retail deposit trend, operating expenses and net interest margins (NIMs). 

JP Morgan also maintained an "overweight" call with a target price of ₹1,800. The research firm said the bank is slowing down to speed up. The deposit balances in the period were flat quarter on quarter. The loan mix is moving towards retail, commercial and rural banking (CRB), it added. 

Nomura maintained a "neutral" call with a target price of ₹1,660, saying that reported loan growth and deposit growth numbers are lower than usual despite accounting for the seasonality factor. Liquidity coverage ratio (LCR) was also up sharply quarter on quarter with average deposit growth at 4.6%. The brokerage also said the number suggests some moderation in core NIMs in the quarter. 

Price Action: Shares of HDFC Bank were down 3.44% to ₹1,667.65 on early Friday morning.

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