HDFC Bank shares surge 3% post Q1 results. Should you buy, sell or hold? (2024)

HDFC Bank surged nearly 3% to Rs 1,650.7 in Monday's trade on BSE after the country's top private lender reported a standalone net profit of Rs 16,175 crore for the quarter ended June 30, 2024, which was up by 35% over Rs 11,952 crore reported by the bank in the year-ago period. However, it was down by 2% sequentially versus Rs 16,512 crore reported in Q4FY24.

The interest earned by the largest private lender stood at Rs 73,033 crore in the reported quarter versus Rs 48,587 crore in the corresponding quarter of the previous financial year. It was up by 50% on the YoY basis.

The interest expended by HDFC in the said quarter stood at Rs 43,196 crore which was up from Rs 24,988 crore which was an uptick of 73% on the YoY basis.

HDFC Bank's net interest income for the reported quarter grew 26.4% to Rs 29,840 crore from Rs 23,600 in the quarter ended June 30, 2023.

Provisions and contingencies in the April-June period stood at Rs 2,600 crore versus Rs 2,860 crore in the corresponding quarter of the last financial year. Total deposits stood at Rs 23,79,100 crore in Q1FY25 which was a 24.4% YoY jump.

Should you buy, sell, or hold HDFC Bank's stock? Here's what analysts say:

Motilal Oswal

Motilal Oswal reiterated its 'Buy' rating on HDFC Bank with a target price of Rs 1,850.

"HDFCB posted an in-line performance, characterized by slight margin improvement and controlled provisions. While the bank has not given any specific guidance on the C/D ratio, management has indicated that it will actively focus on bringing the ratio down at an accelerated pace. We estimate HDFCB to deliver 16% CAGR in deposits and a slower 10.1% CAGR in loans over FY24-26. We thus estimate HDFCB to deliver an FY26 RoA/RoE of 1.9%/15.1%," the brokerage firm said.

Kotak Equities

Kotak Equities maintained its 'Buy' rating on HDFC Bank with a target price of Rs 1,850 (From Rs 1,750).

"HDFC Bank reported a largely unchanged sequential operating profit performance backed by comfortable asset quality metrics. NIM expansion led by improvement in a combination of liability or asset yields remains the key thesis but there was no progress to show this quarter. Overall results were not surprising as we expect only a steady improvement. We maintain BUY rating, valuing it at 2.3X book for RoEs at ~16% level but highlight that this path to re-rate is likely to be slow," it said.

Emkay

Emkay retained its 'Buy' rating on HDFC Bank with a target price of Rs 2,000.

"We have cut our credit growth estimates over FY25-27 to 10-12% from 12-14%, partly offset by contained credit cost, leading to 2-6% earnings cut. However, we retain BUY, rolling fwd on 2.4x Jun-26E standalone bank ABV and better subs valuations (Rs270/share vs Rs250 earlier). We believe incremental deposit mobilization and IPO of HDB Financial Services will be key near-term monitorables," Emkay said.

Nuvama

Nuvama retained its 'Buy' rating on HDFC Bank with a target price of Rs 1,850 (From Rs 1,750).

"Maintain ‘BUY’ given the bank’s strong franchise. We reckon asset growth shall rebase lower till LDR moves below 100%. NIM and PSL are key monitorables," it said.

ICICI Securities

ICICI Securities maintained its 'Buy' rating on HDFC Bank with a target price of Rs 1,850.

"Core fee, opex and asset quality were broadly in line. Despite modelling-in solid ~18% CAGR in deposits over FY24-26E, enabled by expanding distribution/focus, loan growth (~12% CAGR) is likely to lag systemic average as the bank looks to improve elevated LDR and borrowing substitution. We maintain BUY with an unchanged target price of Rs 1,850, valuing the core banking business at ~2.3x FY26E ABV," it said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times.)