HDFC Bank’s share price tag was trading flat with a positive bias on Tuesday morning, a day soon after the biggest private sector lender informed the bourses of its quarterly overall performance. HDFC Bank mentioned that its advances grew 13.9% on-year basis in the preceding quarter, though deposits grew 16.3% more than the identical period. The bank has reported robust quarterly numbers regardless of facing sanctions by the Reserve Bank of India (RBI), for repeated IT failures. Leading domestic brokerage firms see the quarterly business enterprise update as a positive for HDFC Bank. The private sector bank presently trades at Rs 1,448 apiece.
Advances at the finish of March 2021 stood at Rs 11.32 lakh crore for HDFC Bank, against Rs 9.94 lakh crore in the year-ago period. Retail loans grew 7.5% on-year basis, though domestic wholesale loans grew at a staggering 21%.
Business update encouraging
Analysts at Motilal Oswal wrote that the developments are “encouraging given the RBI restrictions on the Credit Card business”. “HDFC Bank continues to deliver healthy growth in advances, led by an uptick in retail loans; this is likely to further support fee income,” they added. CASA deposits of the bank grew 27% on-year basis. “We expect HDFC Bank to maintain a positive margin trajectory, aided by an improving CASA mix and healthy loan growth trends,” the note mentioned. Motilal Oswal has a ‘Buy’ rating on the scrip with a target price tag of Rs 1,800 per share.
On the other hand, Emkay Global believes HDFC Bank’s business enterprise momentum has moderated in the preceding quarter. “On the asset quality front, we believe agri and CV portfolios could show some stress, but overall NPA ratios should remain range-bound,” they mentioned. Emkay Global as well has a ‘Buy’ rating on the stock with a target of Rs 1,850 per share, translating to 27% upside from present levels.
Card business enterprise restrictions — an overhang
The RBI has placed restrictions on HDFC Bank, barring it from acquiring new credit card business enterprise. The restrictions come soon after HDFC Bank failed to resolve the difficulty of repeated tech outage that prospects faced. Emkay Global believes that this could stay an overhang for the stock. “In our view, the restriction imposed by the RBI on the bank’s credit card business is likely to remain an overhang on the stock as any relief in form of the early lifting of the suspension could be delayed in the wake of recent tech outages,” they added.
(The stock suggestions in this story are by the respective study and brokerage firms. TheSpuzz Online does not bear any duty for their investment assistance. Please seek advice from your investment advisor ahead of investing.)