| Result Analysis: HDFC bank (CMP: Rs.1679.20) | Result Update: Q1FY24 |
HDFC Bank Ltd. is India’s leading private bank with banking network of 7,860 branches and 20,352 ATMs in 3,825 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.
| Stock Details | |
| Market Cap. (Cr.) | 12,65,708 |
| Equity (Cr.) | 753.76 |
| Face Value | 1 |
| 52 Wk. high/low | 1758 / 1338 |
| BSE Code | 500180 |
| NSE Code | HDFCBANK |
| Book Value (Rs) | 384.25 |
| Sector | Banks |
| Key Ratios | |
| ROE (%): | 16.69 |
| TTM EPS: | 64.73 |
| P/BV: | 4.37 |
| TTM P/E: | 25.94 |
Result Highlights:
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HDFC bank reported a strong 30% YoY increase in the consolidated net profit and 38% YoY increase in the total income in June’24 quarter.
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Net Interest Income of the bank grew by 21.1% YoY to Rs.23,599 cr. while Net Interest Margin slightly increased by 30 bps to 4.30% on YoY basis.
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Banks’s deposits growth is ahead of its advances growth in the Q1FY24 with 19.2% Vs 15.8% YoY.
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On yearly basis, Domestic retail loans grew by 20%, commercial and rural banking loans grew by 29.1% and corporate and other wholesale loans grew by 11.2%. Overseas advances constituted 2.6% of total advances.
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CASA deposits grew by 10.7% YoY with savings account deposits at Rs.5,60,604 cr. and current account deposits at Rs.2,52,350 cr. CASA ratio declined in the quarter with 330 bps YoY to 42.5%.
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Asset quality of the bank has declined slightly in the quarter with Gross NPA at 1.17% Vs 1.12% QoQ and Net NPA ratio at 0.30% Vs 0.27% QoQ. The NPA majorly increased in the commercial and rural segment.
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The cost to income ratio of the bank has increased in Q1 from 42% to 42.8%.
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HDB Financial Services, subsidiary of HDFC Bank reported strong growth of 19% YoY in disbursements across segments.
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Bank has added 39 branches in the quarter and also added 2mn customers to its customer’s base making it to 85 mn.
Financial Performance:
Shareholding Pattern:
| Particulars (In %) | Q1FY24 | Q1FY23 |
| Promoters Group | 20.83 | 20.97 |
| FIIs | 27.39 | 44.99 |
| DIIs | 22.03 | 22.09 |
| Public | 28.29 | 10.25 |
| Others | 1.47 | 1.70 |
Conference Call Highlights:
- The merger between HDFC Bank and HDFC Ltd. aims to enhance the opportunity for upselling a range of HDFC Bank products to existing Home Loan customers of HDFC Ltd.
- Management highlighted that economic activity is strong in Q1 with healthy GST collections and continuous growth in remittances, retail, and consumer spends.
- The bank has seen 14% growth in RTGS/ NEFT transactions, while 44% growth in UPI transactions in Q1FY24.
- CRB distribution has reached 0.19m villages as on Q1FY24 and the target is to reach 0.20m villages in the near term.
- Payzapp App reported 13mn transactions during the quarter.
- Express car loan volumes contributes 30% of the total car loans acquired during the quarter.
- The bank is aiming at an ROA of 1.9-2.1% for the merged entity and is estimating a 17-18% credit growth going forward.
Outlook:
HDFC Bank reported steady performance in the Q1FY24 with 30% YoY growth in the Net profits, supported by lower provisioning and 38% YoY growth in the Income. Loan growth was healthy at 15.8% YoY driven by strong traction in Commercial and Rural Banking. Bank’s asset quality remained broadly stable, NNPA was affected QoQ due to higher seasonal slippages in agri segment. Healthy PCR and a contingent provisioning buffer should support asset quality further. We remain positive on the bank’s longer term perspective given its large network and stable asset quality.
Results:
| Particulars (In Rs. Cr.) | Q1FY24 | Q4FY23 | Q1FY23 | QoQ% | YoY% |
| Interest Earned | 48,587 | 45,119 | 35,172 | 7.7% | 38.1% |
| Interest Expended | 24,988 | 21,768 | 15,691 | 14.8% | 59.3% |
| Net Interest Income | 23,599 | 23,352 | 19,481 | 1.1% | 21.1% |
| Operating Profit | 18,772 | 18,621 | 15,368 | 0.8% | 22.2% |
| Provisions | 2,860 | 2,685 | 3,188 | 6.5% | -10.3% |
| Tax | 3,960 | 3,888 | 2,984 | 1.9% | 32.7% |
| Net Profit after tax | 11,952 | 12,047 | 9,196 | -0.8% | 30.0% |
| Deposits | 19,13,096 | 18,83,395 | 16,04,760 | 1.6% | 19.2% |
| Advances | 16,15,672 | 16,00,586 | 13,95,068 | 0.9% | 15.8% |
| Ratios (%) | Q1FY24 | Q4FY23 | Q1FY23 | QoQ | YoY |
| Gross NPA | 1.17 | 1.12 | 1.28 | 50 bps | -110 bps |
| Net NPA | 0.30 | 0.27 | 0.35 | 30 bps | -50 bps |
| Net Interest Margin | 4.30 | 4.28 | 4.00 | 20 bps | 30 bps |
| Capital Adequacy Ratio | 18.9 | 19.3 | 17.5 | -330 bps | 141 bps |
| CASA Ratio | 42.5 | 40.0 | 45.8 | 250 bps | -330 bps |
Source: Company website, EWL Research
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