Hdfc Bank plunges 1% after third quarter results; Should investors buy, sell or hold?

Shares of HDFC Bank saw a weak reaction on Monday after the lender released quarterly results over the weekend. Intraday, the stock fell more than 1 percent. As of 9:36 a.m., the bank’s shares were down 0.5% at Rs 1,537.25 on BSE.

The bank reported consolidated net profit of Rs 10,591 crore, up 20.8% year-on-year (YoY), and consolidated advances of Rs 13.12,142 crore, up 15.8% year-on-year annual.

It reported revenue of Rs 26,627 crore for the December quarter, a year-on-year increase of 12%. The bank reported net income of Rs 23,760.8 crore in the corresponding period last year.

The bank said its gross non-performing assets were 1.26% of gross advances, down from 1.35% quarter-on-quarter and 1.385 year-on-year. Net non-performing assets represented 0.37% of net advances.

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Here is what the brokers said:

macquarie

The lender is Macquarie’s first choice in banking. The brokerage maintained its ‘outperform’ recommendation on HDFC Bank shares with a target price of Rs 2,005. Lower provisions helped the lender align third quarter figures. The brokerage isn’t worried about weak pre-provision operating profit growth and noted that return on assets was 2.3%, which is close to a record high and put the spotlight on highlights the lender’s strong balance sheet and asset quality.

nomura

The brokerage has a ‘buy’ call on HDFC Bank with a target price of Rs 1,955. It noted that the recovery continues, asset quality holds better but operating profit before provisioning base was low.

Swiss credit

The brokerage has an “outperform” recommendation with a target price of Rs 1,950 and believes the bank is well positioned to generate healthy profits. The resumption of growth and benign asset quality led to higher returns on equity, according to Credit Suisse.

JP Morgan

JP Morgan raised its target price to Rs 2,100 and said the overall earnings impression was good with improving loan growth. He has an “overweight” call option on shares of HDFC Bank. The brokerage sees a rise in net interest margin in FY23 and believes valuations are attractive.

CLSA

The brokerage has forecast earnings growth of 18% compounded annually in FY22-24. The management comment indicates that retail and commercial growth will remain strong, CLSA noted. The brokerage has a ‘buy’ rating on HDFC Bank shares with a target price of Rs 2,025.

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