HDFC Bank has divested around 135 billion shares of HDB Financials as an offer for sale during its IPO in June 2025. The gross value for the OFS was Rs 100 billion and post the estimated IPO expense the net gain for the bank was Rs. 91.28 billion. The same was accounted as part of other income during the quarter.
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Systematix Report
HDFC Bank Ltd. reported Q1 FY26 PAT of Rs 181.55 billion which is up by 3.1% QoQ and 12.2% YoY. As expected, the bank had a one-off gain of Rs 91.28bn on sale of HDB Financials shares. The bank has almost entirely used it towards creating provisions where it has made a floating provision of Rs 90 billion.
Further the bank has made a contingency provision of Rs 17 billion. The bank has witnessed higher slippages during the quarter, but they are mainly due to seasonally high agri slippages.
The bank has witnessed fall in the net interest margin due to the transmission of the repo rate cuts. Total advances growth remains weak but broadly within guided lines. Management expects asset quality expects to improve going forward and the system level advances growth to improve from the start of festive season.
Based on our revised estimates we have revised our target price to Rs 2,290 (from Rs 2300 earlier) and maintain our Buy rating on HDFC Bank.
We are valuing the standalone bank at 2.5x its FY27E book value per share of Rs. 811. Further, we assign Rs 266 per share value to its subsidiaries and associates.
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