Result Analysis HDFC bank

HDFC Bank Ltd. is India’s leading private bank with banking network of 7,945 branches and 20,596 ATMs in 3,836 cities/towns. It offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services, Retail Banking Services and Treasury. The services offered by the bank include Personal Accounts & Deposits, Loans, Cards, Forex, Investments and Insurance.

Result Analysis: HDFC bank (CMP: Rs.1529.50)

Result Update: Q2FY24

Outlook:

HDFC Bank, world’s fourth largest bank reported above market estimates results in the Q2FY24 with 50.6% YoY growth in the Net profits, supported by lower provisioning and lower tax rate in the quarter. After merger, mortgages account for 60% of the retail loan book which would benefit the bank with steady stream of income and risk minimization over the long term. Impressive asset management of the bank is evident through its strong asset quality which were above estimates. Bank’s NIM reached to the low of 3.4% and is expected to improve in the coming quarters on behalf of removal of ICRR. The current P/B ratio stands at 2.77 which is significantly below of 1-yr and 3-yr median P/B of 3.3 and 3.56 respectively. Hence, we remain long on the stock with target price of Rs.1760 for period of 12 months.

Results:

Particulars (In Rs. Cr.)	Q2FY24	Q1FY24	Q2FY23	QoQ%	YoY%	H1FY24	H1FY23	YoY%
Interest Earned	67,698	48,587	38,586	39.3%	75.4%	1,16,285	73,758	57.7%
Interest Expended	40,313	24,988	17,565	61.3%	129.5%	65,301	33,256	96.4%
Net Interest Income	27,385	23,599	21,021	16.0%	30.3%	50,984	40,503	25.9%
Operating Profit	22,694	18,772	17,392	20.9%	30.5%	41,466	32,760	26.6%
Provisions	2,904	2,860	3,240	1.5%	-10.4%	5,764	6,428	-10.3%
Tax	3,814	3,960	3,546	-3.7%	7.5%	7,774	6,530	19.0%
Net Profit after tax	15,976	11,952	10,606	33.7%	50.6%	27,928	19,802	41.0%
Deposits	21,72,858	19,13,096	16,73,408	13.6%	29.8%	21,72,858	16,73,408	29.8%
Advances	23,31,233	16,15,672	14,79,873	44.3%	57.5%	23,31,233	14,79,873	57.5%

 

Ratios (%)	Q2FY24	Q1FY24	Q2FY23	QoQ	YoY
Gross NPA	1.34	1.17	1.23	17 bps	11 bps
Net NPA	0.35	0.30	0.33	5 bps	2 bps
Net Interest Margin	3.40	4.10	4.10	-70 bps	-70 bps
Capital Adequacy Ratio	19.5	18.9	18.0	60 bps	146 bps
CASA Ratio	37.6	42.5	45.4	-490 bps	-780 bps

 

Source: Company website, EWL Research

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