HDFCB saw a good quarter yet again with a beat on core PAT due to better NIM, opex and provisions. Higher NIM was led by the utilization of excess cash and superior loan mix that was a function of QoQ reduction in corporate and increase in retail. Borrowings of e-HDFCL stood at Rs4trn in Mar’24, of which 45% would mature equally between FY25/26/27; e-HDFCL deposits may mature at a faster pace than borrowings. Due to cost differential of 75-100bps between liabilities of e-HDFCL and the bank and improving loan mix, we raise NIM for FY25/26E by 4/5bps. We expect NIM for FY26E to increase by 12bps YoY to 3.67%. Bank suggested that decline in LDR could be faster, and hence, we cut loan growth by 2% each in FY25/26E.
OutlookFactoring deposit CAGR of 16%, LDR is likely to reach 94% by FY26 end (earlier 96%). PSL requirement would be a key monitorable that could affect core PAT. Tweaking the multiple from 2.6x to 2.5x on Mar’26 core ABV, we maintain TP at Rs2,000. Retain ‘BUY’.
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