The brokerage firm Nuvama Institutional Equities maintained its ‘Buy’ rating on the stock with a target price of Rs 1,950. It believes that HDFC Bank achieved impressive results during a challenging macroeconomic environment. These results reflect consecutive positive developments in asset quality, a significant increase in deposit market share, ongoing enhancements in the loan-to-deposit ratio, and core margins that met expectations.
Nuvama on HDFC Bank: Lower slippages
The first quarter of PSL for e-HDFC has been successfully handled by the bank despite concerns about potential shortcomings. The lender’s slippage, when agriculture is excluded, remained unchanged compared to the previous quarter, while including agriculture showed a growth of 13% quarter over quarter, said Nuvama in a research note. Even with the agriculture sector, the overall lagged slippage ratio of 1.4% is still the lowest in comparison to other private lenders.
During the earnings call, management said deposits grew faster than loans, enabling the bank to make progress in normalising its credit-deposit ratio. It added that the bank has sufficient liquidity and capital to comfortably support loan growth when the macroeconomic environment becomes more favourable.
Despite the slowdown in the loan book, the bank’s key ratios have remained stable due to high-quality origination and effective collections, said the management. It was confident of loan growth and expects to outperform system growth by FY27.
HDFC Bank Q3 performance
HDFC Bank’s share price rose 1.3% to an intra-day high of Rs 1,687 after the company reported its quarterly results for the third quarter of FY25.
India’s largest private lender announced a standalone net profit growth of 2.2% year-on-year at Rs 16,736 crore, against Rs 16,372.54 crore in Q3 FY24.
HDFC Bank’s net interest income rose by 7.7% on year to Rs 30,650 crore due to the stability of the net interest margin, which was 3.43%. The total income grew 7% YoY to Rs 87,460 in Q3 FY25 compared with Rs 81,720 crore in Q3 FY24.
HDFC Bank reported a net interest income of Rs 11,450 crore, up 2.8% on year on the back of healthy growth in core fees and commissions.
HDFC Bank in Q2
The private lender posted a 5.3% on year increase in its standalone net profit that came in at Rs 16,821 for Q2 FY25.
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