Shares of HDFC Bank declined marginally to Rs 1,737 per share on January 6 after deposit growth outpaced loan growth for the December quarter by a wide margin. Brokerages remain largely positive on the private lender as loan-to-deposit ratio (LDR) fell below 100 percent for the first time after merger.
Over the past 6 months, the stock of India's largest private lender surged 7 percent, as compared to over a percent decline in the Nifty 50 index.
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In the December quarter business update, HDFC Bank's deposits grew by 15.8 percent YoY to Rs 25.63 lakh crore, while loans rose modestly by 3 percent YoY to Rs 25.4 lakh crore. In the advances segment, retail loans grew by 10 percent YoY, commercial and rural banking loans rose by 11.5 percent YoY, and corporate and wholesale loans were lower by 10 percent YoY.
Following these results, Jefferies issued a "buy" recommendation on the stock, setting a target price of Rs 2,120 per share. The brokerage attributed the softer loan growth in Q3FY25 to a pullback following a particularly strong quarter and noted that the loan-to-deposit ratio (LDR) had fallen to 99 percent YoY, outside their target range of 90 percent. Despite this, Jefferies analysts believe the bank's valuations already reflect the softer growth, with net interest margins (NIMs) being the critical factor to watch in the upcoming quarters.
Meanwhile, Morgan Stanley and Bernstein shared "overweight" calls on the counter and assigned target price at Rs 1,975 and Rs 2,300 per share, respectively. Analysts at Morgan Stanley said that margin progression will be the next focus in upcoming quarterly results as strong deposit growth has sustained with improving LD ratio.
Bernstein, on the other hand, sees the Q3 update as positive set of numbers. Besides that, Nomura shared "neutral" rating on HDFC Bank and put out target price at Rs 1,780 per share.
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