HDFC Bank’s robust Q4 business update supports banking rally; retail loan doubles YoY

Shares of HDFC Bank rose 2 percent on April 4 in early trade, a day after the country’s largest private lender shared robust business update for the quarter ended on March 31, 2024. The stock was top Nifty gainer and also the reason for Bank Nifty hitting a new high in early trade.

HDFC Bank’s gross advances aggregated to Rs 25.08 lakh crore, growing 55.4 percent from the year-ago period, the lender said in a regulatory filing on April 3.

At 10.08 am, HDFC Bank shares were trading at Rs 1,513.35 on the National Stock Exchange (NSE). So far this year, the stock has fallen over 10 percent, underperforming the benchmark Nifty, which has gained 3 percent during the period.

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HDFC Bank’s domestic retail loans surged 108.9 percent YoY, and commercial and rural banking loans grew 24.6 percent. Corporate and other wholesale loans grew 4.1 percent on year.

Deposits aggregated to Rs 23.8 lakh crore, a growth of around 26.4 percent YoY. Retail deposits were up 27.8 percent and wholesale deposits grew 19.4 percent from the year-ago quarter.

FIIs have reduced their shareholding in HDFC Bank in the March quarter. As of March 31, 2024, the FII holding in HDFC Bank stood at 47.8 percent against 52.3 percent in the December quarter.

While the overall FII stake has come down, two new names-Vanguard Total International Stock Index Fund and the Government Pension Fund Global-emerged as prominent buyers during the quarter.

‘Buy’ call on HDFC Bank

Prabhudas Lilladher has a “buy” rating on HDFC Bank. Technicals suggest that after a sizable erosion from the peak of Rs 1,720, the stock has consolidated in the Rs 1,360-1,470 range and is now trading above 50-DMA of 1,440, giving a rectangle pattern breakout on the daily chart.

HDFC Bank futures witnessed short covering above 1,480 and the Daily VWAP level of 1,450 is also near 50 DMA.

The option chain suggests 1,500 CE writers have the highest OI and are aggressively active, with more than 8 lakh OI and 1,400 PE & 1,450 PE writers holding maximum exposure for this series.

“So, with the support of 1,400, one can go long in this counter for an upside target of 1,700 – 1,800,” the brokerage said.

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LKP Securities also has a “Buy” call on the stock as the brokerage sees a turnaround for the lender with Return on Asset (RoA) expected to remain stable despite higher operating expenses. “We recommend a ‘strong buy’ with a target price of Rs 1,762,” the brokerage said.

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