Sharekhan's research report on HDFC Bank
HDFC Bank reported PAT at Rs. 15,977 crore on the merged basis beating consensus and our estimates by 9%/8% respectively mainly due to lower tax rate led by one off item i.e. write back of tax provisions amounting to ~Rs. 1,000 crore from a favorable appellate orders. NIMs were lower at ~3.6% based on interest earning assets for the merged entity in Q2FY24 vs ~3.7-3.8% in Q1FY23 based on the proforma disclosed earlier. Excess liquidity built up required for LCR and for incremental CRR led to ~25 bps negative impact on NIMs resulting in NII missing consensus and our estimates by 3%/2% respectively. Management guided that NIMs would normalize gradually over the next few quarters as liquidity was made available through debt funding and it would require time to retire as they are not short term in nature. Despite significant margin pressure, bank reported RoA of ~2.0% led by higher other income, lower credit cost and lower tax expense.
Outlook
The stock trades at 2.2x/2.0x its FY2024E/FY2025E core BV estimates. We maintain our Buy rating with an unchanged PT of Rs. 1,900.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
