What are your views on HDFC Bank earnings? How are you looking at the stock price now?
HDFC Bank Q3 results were above expectations and much above what the Street was expecting. Provisional loan growth was close to 16% and the surprise was largely I from the other income which was much ahead of expectations. The PAT growth no doubt has been driven by core income but other income has also positively contributed during this quarter.
At the start of the pandemic, everybody was expecting a major slowdown but it has not happened in the case of HDFC Bank. But my take is a bit different. I observed that during this quarter also the growth was probably led by wholesale lending and not by retail. Retail just grew 5.5%. For the last two-three quarters, the wholesale segment has been leading the growth. No doubt, the overall growth has been very strong. But HDFC has been historically known for retail-oriented growth and as long as that segment does not grow, there will be some sort of concern even though the absolute bottom line continues to grow and outperform.
On the asset quality front, the bank been able to manage the quality so far and as far as restructuring is concerned, net-net the numbers have been decent and there has been no negative surprise so far.
As far as stock price calls are concerned, we are not going to revive our target price upwards. Our last target price was Rs 1,250. We will not raise it until and unless the retail momentum picks up.
