HDFC Bank shares have recently hit a 52-week low following a 10% decline after the release of its Q3 earnings. The stock is now in the oversold territory with an RSI of 24.5, indicating potential for a recovery. Despite the dip, global brokerage CLSA maintains a buy rating with a target of Rs 2,025 per share, emphasizing foreign investors’ optimism about the end of the EPS cuts cycle. In contrast, Nuvama downgraded the stock to ‘hold’ due to concerns about deposit and net interest margin (NIM).
The market cap of HDFC Bank has fallen to Rs 11.12 lakh crore amidst broader market rally. The stock, with a one-year beta of 0.5, suggests low volatility. Currently, it’s trading below various moving averages, signaling a significant correction post Q3 earnings that surprised many investors. Financial Services firm Motilal Oswal assigns a target of Rs 1950, highlighting the bank’s healthy loan growth and improved asset quality ratios.
Brokerage KR Choksey maintains a positive outlook, assigning a target price of Rs 1950, based on valuing the bank’s standalone business at 2.2 times FY26E P/ABV and subsidiaries at Rs 233. However, Nuvama has downgraded the stock to ‘hold,’ cutting earnings by 5-6% for FY25E-FY26E due to concerns about the bank’s liquidity coverage ratio (LCR) and deposit growth.
HDFC Bank reported a 34% rise in standalone net profit to Rs 16,373 crore for Q3 FY24, surpassing the previous fiscal year’s corresponding quarter. Total income also increased to Rs 81,720 crore in the same period. The bank’s margin remained largely flat, slightly below expectations, but with healthy loan growth and improved asset quality ratios, it aims for gradual NIM improvement over the coming years.
In conclusion, HDFC Bank’s recent dip to a 52-week low has stirred diverse opinions among brokerages. While CLSA and KR Choksey maintain a positive outlook, Nuvama has concerns about the bank’s ability to manage its LCR and deposit growth. Motilal Oswal remains optimistic, emphasizing the bank’s healthy financials and potential for improved return ratios. Investors are closely monitoring developments to gauge whether HDFC Bank can recover from its recent downturn.
The recent decline in HDFC Bank shares to a 52-week low has triggered a mixed response from market participants. The stock’s 10% drop post Q3 earnings has led to it being oversold, with the relative strength index (RSI) at 24.5, signaling a potential recovery. The market cap has contracted to Rs 11.12 lakh crore amid a broader market rally. Despite this, the stock maintains a low volatility profile with a one-year beta of 0.5.
Global brokerage CLSA remains bullish on HDFC Bank, maintaining a buy rating with a target of Rs 2,025 per share. The positive sentiment is attributed to foreign investors who believe the bank is nearing the end of the earnings per share (EPS) cuts cycle. However, Nuvama has downgraded the stock to ‘hold’ post Q3 earnings, expressing concerns about the bank’s liquidity coverage ratio (LCR), deposit growth, and a need to lower its loan-to-deposit ratio (LDR).
KR Choksey, on the other hand, assigns a target price of Rs 1950, valuing the bank’s standalone business at 2.2 times FY26E P/ABV and subsidiaries at Rs 233. This implies an upside of 26.8% from the current price, and the brokerage maintains a “BUY” rating.
Motilal Oswal provides a target of Rs 1950, highlighting the bank’s healthy loan growth and improved asset quality ratios. Despite the margin standing largely flat, the bank deployed excess liquidity and drew down the LCR ratio, maintaining a provision coverage ratio (PCR) of 75%. Management indicates that net interest margins (NIMs) will gradually improve, contributing to healthy return ratios over the coming years.
In summary, the future trajectory of HDFC Bank shares remains uncertain. While some brokerages are optimistic about a recovery, others express concerns about key financial metrics. Investors are closely watching the bank’s ability to navigate challenges and deliver on its growth and profitability outlook.