HDFC Bank gains more than 3% Q2 show; Goldman Sachs sees potential upside of 28%
Shares of the country’s leading private sector lender HDFC Bank in the session on Monday (October 21) recorded positive gains of more than 3 percent after the Q2FY25 performance was reported on Saturday. The stock hit an intraday high of Rs 1,734.45, while at around 9:32 am it was up 2.93 percent or Rs 49.3 at Rs 1,730.45 apiece.
According to Zee Business Research, the private sector bank posted largely flat results with net profit for the July-September quarter rising 5.3 percent year-on-year to Rs 16,821 crore. At the time of review, Zee Business analysts had expected profit to come in at Rs 16,292 million.
The lender said its net profit grew by 17 per cent in the year-ago period when adjusted for trade and market (MTM) gains and tax credits.
Net interest income (NII)- the difference between interest paid and interest earned also rose by 10 percent year-on-year to Rs 30,113 crore.
Meanwhile, the key profit profitability metricnet interest margin (NIM), however, took a nosedive and stood at 3.46 percent compared to 3.47 percent in the previous year period.
HDFC Bank asset quality
Asset quality at the lender registered a slight hit during Q2 as its gross non-performing assets (GNPAs) stood at 1.36 percent as a percentage of total loans for the September quarter compared to 1.33 percent in the previous three months, while the total was not. -performing assets (NNPAs) worsened to 0.41 percent from 0.39 percent.
Here’s how global brokerages view HDFC Bank after its Q2FY25 show
Goldman Sachs remained bullish on the stock’s outlook and maintained a ‘buy’ call with a suggested target of Rs 2,150 from the previous Rs 1,961 per share, implying about 28 percent gains from the previous period.
The brokerage maintained that the private lender posted a core operating profit and a slight beat in PAT during the review period on stronger quality and better earnings visibility. Also, the brokerage insisted that the bank’s management set a path forward in terms of loan growth as it includes the Loan-Deposit ratio.
CLSA, a Hong Kong-based brokerage, meanwhile maintained its hold call on the stock and raised the target to Rs 1,785 per share from Rs 1,725 earlier.
JP Morgan also raised its target on the stock to Rs 1,750 while maintaining a ‘neutral’ rating, The lender’s 2Q PAT at Rs168bn (+5% y/y; ROE: 14.6%) was ahead of JPMe by percentage -3 for AIF reversal. – related provisions. Adjusted for this, net income, however, was in. Also, core PPOP growth was 13 percent better year-on-year.
Macquarie maintained its outperform view at Rs 1,900 per share on the stock.
