HDFC Bank stock may have bottomed out

HDFC Bank had a muted OctoberDecember quarter (Q3) with the acceptable pre-provision operating profit (PPOP) and profit after tax (PAT).

- DEVANGSHU DATTA

The deposit growth, however, was modest at 1.9 per cent quarteron-quarter (Q-o-Q). The margin remained flat at 3.4 per cent despite a rise in the credit-deposit (CD) ratio.

The NII (net interest income) growth came in at 2 per cent, slightly lower than consensus but healthy other income boosted by treasury gains compensated.

The gross non-performing asset (NPA) ratio improved 8 bps Q-o-Qto 1.3 per cent, while the provision coverage ratio or PCR improved to 75 per cent.

Fresh slippages moderated to ₹7,000 crore about 1.2 per cent of loans. Analysts estimate HDFC Bank to report 17 per cent and 19 per cent compounded annual growth rate (CAGR) in loans and deposits during FY24-26, while earnings are seen clocking CAGR of 20 per cent, translating into estimated RoA and RoE of 1.9 per cent and 16.7 per cent by FY26.

RoA is return on asset and RoE is return on equity.

Other income stood higher at 11,100 crore, aided by treasury gains coupled with good traction in core fees.

During 9MFY24, PAT grew 22 per cent year-on-year (Y-o-Y) to ₹54,100 crore versus ₹32,100 crore (ex-merger) over 9MFY23.