KR Choksey's research report on HDFC Bank
Net Interest Income (NII) for Q3FY24 stood at INR 284,713 Mn, a growth of 23.9% YoY/ 4.0% QoQ. The core NIMs for the quarter stood at 3.4% in Q3FY24, a decline of 91 bps YoY. For 9MFY24, NII stood at INR 794,556 Mn, a growth of 25.1% YoY. Pre-Provision Operating Profits (PPOP) grew 24.3% YoY/4.2% QoQ to INR 236,473 Mn, with operating income growing by 25.8% YoY/4.0% QoQ. In 9MFY24, the PPOP reported a growth of 25.7% YoY to INR 651,132 Mn. Provisions for Q3FY24 were at INR 42,166 Mn as against INR 28,064 Mn in Q3FY23 (vs. INR 29,038 Mn in Q2FY24). Net profit for Q3FY24 stood at INR 163,725 Mn, a jump of 33.5% YoY/ 2.5% QoQ, led by a lower tax rate of 15.7% compared to 24.4% in Q3FY23. 9MFY24's PAT growth was 38.2% YoY at INR 443,004 Mn. HDFCB reported its GNPAs at 1.26% as of December 31, 2023, compared with 1.23% as of December 31, 2022 (vs. 1.34% as of September 30, 2023, on a pro forma merged basis). The NNPAs for the quarter ended stood at 0.31% vs. 0.33% of the net advances as of December 31, 2022. The Capital Adequacy Ratio (CAR) stood at 18.4%. CET-1 ratio stood at 16.8% as of December 31, 2023.
Outlook
We value the bank's standalone business at 2.2x FY26E P/ABV to INR 1,716 and the subsidiaries at INR 233, taking the total value to INR 1,950 (earlier INR 2,060 per share), implying an upside of 26.8% from the current price. Accordingly, we maintain a "BUY" rating on the shares of HDFC Bank Ltd.
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