Brokerages largely have targets in excess of Rs 1,800 on the stock.
At 10:36 am, the scrip was trading 2.64 per cent lower at Rs 1,390.70.
“The bank’s lower asset quality vulnerability than most peers during the trying covid times is a reflection of HDFC Bank’s risk selection and capital productivity consciousness,” said Edelweiss Securities.
The brokerage said that uncertain times put a premium on resilience, which is what HDFC Bank offers – a strong balance sheet and likely higher residual capital than most.
“This higher residual capital ensures that its best-in-class franchise can support an adequately large balance
sheet after this crisis and fulfil its earnings potential,” it added.
The private lender reported an 18.2 per cent year-on-year rise in net profit to Rs 8,186.51 crore for the March quarter, as against 23 per cent growth expected by analysts. The lender reported a net interest income of Rs 17,120.2 crore, up 12.6 per cent from a year-ago quarter, which met Street expectations.
Gross non-performing assets (NPAs) stood at 1.32 per cent of gross advances as of March 31, slightly higher than 1.26 per cent in the year ago quarter.
Emkay Global said that despite stable NIMs and higher fees leading to a beat on pre-provision operating profit (PPoP), the bank reported a slightly lower profit, mainly due to additional contingent provisions of Rs 800 crore amid the raging second wave of Covid infections. Besides, it made provisions for Rs 500 crore following the interest-on-interest waiver, Emkay said.
While retail credit growth for the bank remained subdued at 8 per cent YoY due to the bank’s cautious stance and the RBI’s suspension of new card acquisition, the corporate growth was strong, leading to retail share slipping to 47 per cent.
“We maintain ‘buy’ on the bank with a target of Rs 1,850, given its cross-cycle best asset-quality, strong franchisee, better growth outlook and superior return profile. However, the RBI’s suspension of new card acquisition due to continued tech outages remains an overhang on the stock,” it said.
CLSA finds HDFC Bank’s Q4 results strong, with a proforma slippage of just Rs 4,700 crore (1.7 per cent of loans). It said that the credit cost of 110 basis points over the past five quarters indicates that HDFC Bank’s “portfolio has remained pandemic proof”.
Jefferies said strong CASA growth was a positive, while suggesting that retail lending momentum for the bank had normalised. It said asset quality for the bank remained strong even as some impact of Covid was seen on collections.
