According to the brokearge HDFC Bank reported a largely in-line quarter, supported by healthy business growth and strong operating profits, although provisions were elevated. Net interest margins on total assets contracted by 10bp QoQ to 3.16%, while the bank has guided for NIMs to be on an upward trajectory from hereon. Healthy loan growth was driven by SME segment, while retail loan growth gathered some momentum. Deposit growth was healthy, with FCNR(B) mobilisation resulting in the CD ratio inching up to 96.0%.
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Motilal Oswal Report
Following HDFC Bank Ltd.'s Septermber-quarter results, domestic brokerage firm Motilal Oswal has raisee its FY27/FY28 earnings estimates by 3.5% each and estimate the bank to deliver FY28E RoA/RoE of 1.74%/14.1%.
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The brokerage has reiterated Buy rating, setting a target price of Rs 925, i.e. 1.8x timesFY28E adjusted book value + Rs 124 for subs.
According to the brokearge HDFC Bank reported a largely in-line quarter, supported by healthy business growth and strong operating profits, although provisions were elevated.
Net interest margins on total assets contracted by 10bp QoQ to 3.16%, while the bank has guided for NIMs to be on an upward trajectory from hereon.
Healthy loan growth was driven by SME segment, while retail loan growth gathered some momentum.
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Deposit growth was healthy, with FCNR(B) mobilisation resulting in the CD ratio inching up to 96.0%.
Motilal Oswal expect the credit-deposit ratio to gradually moderate to ~93% by FY28E through calibrated balance sheet management. The bank maintains contingency and floating provisions of Rs 15,600 crore and Rs 21,400 crore, respectively.
Improvement in NIMs from retirement of highcost borrowings and operating leverage should support a gradual improvement in profitability and return ratios in the coming years.
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