HDFC Bank reports 20% surge in Q3 bottomline: What should you do now?

HDFC Bank’s standalone net profit was at Rs 12,259.5 crore, an increase of 18.5 percent from the same quarter of the corresponding year.

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HDFC Bank share price gained slightly, less than one percent, in early trade of January 16 after the lender came up with its December quarter earnings last week.

Over the weekend, the bank reported a 19.9 percent year-on-year (YoY) jump in its consolidated net profit for the quarter ended December 31, 2022 to Rs 12,698 crore.

HDFC Bank‘s consolidated advances grew 19.2 percent to Rs 15.63 lakh crore in Q3Fy23 from Rs 13.12 lakh crore a year back. Its standalone net profit came in at Rs 12,259.5 crore, an increase of 18.5 percent from the same quarter last year.

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Here is what brokerages have to say about stock and the company post December quarter earnings:

Motilal Oswal

The bank reported an in-line quarter with increased traction in Core PPoP and NII growth, even as margins remained stable.

Loan growth was driven by sustained momentum in the Retail segment and robust growth in Commercial and Rural Banking.

Asset quality ratios remained robust, while the restructured book moderated to 42bp of loans. Healthy PCR and a contingent provisioning buffer should support asset quality.

The broking firm estimates HDFC Bank to deliver a 19 percent CAGR in net profit over FY22-25, with RoA/RoE of 2.0 percent/17.7 percent in FY25.

Motilal Oswal maintained its ‘buy’ rating with a target price of Rs 1,930 (premised on 3.0x September 2024 ABV).

It expects the stock to perform gradually as the margin profile revives and the merger related overhang eases (bank aims to complete the merger by 1Q/2QFY24).

Prabhudas Lilladher

HDFC Bank saw a good quarter with core PAT of Rs 118 billion, beating broking house by 6 percent, led by stronger NII and other income (excluding treasury) while provisions were lower.

NIM was higher by 11bps at 4.84 percent due to superior yields driven by faster asset repricing, while cost of funds was a tad lesser.

Retail wholesale mix improved QoQ from 43:57 to 45:55 led by stronger retail accretion (due to healthy consumption spends) and de-growth in corporate (owing to pricing pressure and widening bond spreads).

Retail deposit accretion was strong at 5 percent on-quarter and its share is now 84 percent (80 percent in March 2022).

It upgraded the bank’s FY23 earnings by 3 percent, led by higher NII and lower provisions. Maintaining multiple at 3.0x, we raise Target Price to Rs 1,850 from Rs 1,800. Retain Buy.

BoFA Securities

Brokerage house has maintained ‘buy’ rating on the stock with a target at Rs 2,000 per share.

Its headline growth/RoAs were on target and deposit ramp-up is a key focus in Q4.

The branch expansion was on fast track near term, reported CNBC-TV18.

Bernstein

Broking firm has kept ‘outperform’ rating on the stock with a target at Rs 2,200 per share.

The Q3FY23 was a clean beat with another show of deposits. The earnings growth driven by healthy credit growth, while NIM was unchanged.

The asset quality trends remained benign, while non-interest income saw significant improvement.

The biggest positive was continued growth in deposits & rise in branch count, reported CNBC-TV18.

Kotak Institutional Equities

Research firm has kept ‘buy’ rating on the stock with a target at Rs 1,800 per share.

The solid earnings led by growth in operating profit & decline in provisions, while increase in branches & headcount to sustain the business momentum.

However, merger continues to be a near-term headwind, reported CNBC-TV18.

Morgan Stanley

The revenue growth was strong which was used to accelerate investments. The core PPoP growth continues to improve and retail TD growth was strong, reported CNBC-TV18.

Jefferies

The retail deposit mobilisation was down. The branch & staff expansion led to cost growth of 27 percent.

The merger timelines are largely on track, reported CNBC-TV18.

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