India's largest private lender HDFC Bank witnessed an 18% YoY growth in its standalone net profit at ₹10,342 crore for the quarter ended December 2021, on loan growth and improved asset quality. HDFC Bank shares were almost flat at ₹1,545 apiece on the BSE in Monday's opening deals.
The bank's gross non-performing assets (NPAs) dipped sequentially to 1.26% of the gross advances as against 1.35% by the end of September. Net NPAs stood at 0.37% from 0.40% quarter-on-quarter (QoQ).
"HDFC Bank’s Q3FY22 performance was characterised by superior asset quality performance, partially offset by modest core fee income, higher opex and steady NIMs (net interest margin)," said ICICI Securities which has a Buy rating on the bank stock with a target price of ₹1,955 per share.
Though, the domestic brokerage house sees Adverse behaviour of restructured pool, lower core fee and higher opex which may drag earnings as key risks.
HDFC Bank’s loans grew 5.1% during the quarter. The lender also stepped up retail lending after the removal of regulatory ban on issuance of new credit cards.
"Bank witnessed strong bounce back in retail disbursements since Q2. The management sounded extremely hopeful about gaining market share in small ticket advances across product. and expand product offering. The improvement in bounce rate, collection efficiency and sequential growth in disbursement provides confidence of strong momentum in business activity and recovery in overdue portfolio," as per analysts at PhillipCapital.
They maintain Buy on HDFC Bank shares with a revised target of ₹2,089 ( ₹2032 earlier) as they believe strong growth aided by improvement in asset quality going ahead will help HDFC Bank deliver PAT growth of around 18% FY21-24.
"With discussion about covid’s impact on asset quality taking a back seat, we think that retail growth, along with NIM expansion, will be the key deliverable to watch out for in the near to medium term. We maintain BUY on the stock with a target price of ₹2,006," said Nirmal Bang.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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HDFC Bank shares set to recover some lost ground? Brokerages see big upside post Q3 results - Mint
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