Q2 Results: What Analysts Made Of HDFC Bank’s Earnings Performance

Analysts remained bullish on HDFC Bank Ltd. as net profit of India’s most valuable lender met estimates, helped by higher other income and stable loan growth.

Net profit rose 26.8 percent year-on-year to Rs 6,345 crore in the quarter ended September, the private lender said in an exchange filing.

The bank’s asset quality, too, remained stable during the quarter. Gross non-performing assets ratio stood at 1.38 percent compared with 1.4 percent in the previous quarter. Net NPA stood at 0.42 percent against 0.43 percent earlier.

Here’s what brokerages have to say about HDFC Bank’s second-quarter performance…

Prabhudas Lilladher

• Retains ‘Buy’; target price unchanged at Rs 1,406 apiece.
• Lower tax rate and steady operating performance helped the bank.
• Commentary on delinquencies in portfolios was steady.
• Bank used the lower tax rate to make Rs 660 crore of contingency provisions.

Equirus

• Target price revised at Rs 1,410 apiece against Rs 1,338 earlier.
• In-line operating performance; retail delinquencies remain stable.
• While year-on-year loan growth in auto loans was subdued at 2.3 percent, disbursements picked up at 12-13 percent sequentially.
• Bank continues to see stable trends in early delinquencies across secured and unsecured segments.

IDFC

• Lower taxation, strong loan growth and higher profit on sale of investments drove earnings.
• Slower net interest income growth and slower balance sheet growth were key negatives.
• HDFC Bank is the best risk-off trade in the financial sector in the current environment.
• HDB Financials reported weak asset quality as it aligned its bad loan recognition and provisioning policy with HDFC Bank.

Emkay

• Maintains ‘Buy’ with a target price of Rs 1,500 apiece.
• Credit growth driven by corporate growth; retail growth slowdown due to moderation in vehicle and personal loans.
• Bad loans were elevated in commercial vehicles (including dealers)/three-wheelers.