HDFC Bank share price gains over 3% after Q2 results. Should you buy, sell or hold?

HDFC Bank share price rallied over 3% on Monday after the private sector lender impressed D-street with decent earnings for the second quarter of FY25. HDFC Bank shares gained as much as 3.17% to ₹1,734.45 apiece on the BSE.

The largest private bank in the country, HDFC Bank reported a standalone net profit of ₹16,821 crore in the quarter ended September 2024, a 5.3% rise from ₹15,976 crore, in the year-ago period.

Net interest income (NII) in Q2FY25 increased 10% to ₹30,110 crore from ₹27,390 crore, YoY, while net interest margin (NIM) was at 3.65% owing to better portfolio mix, defying the industry trend.

Asset quality during the quarter also remained stable compared with deterioration for peers as the bank consciously contained growth in unsecured loans for the past few years.

HDFC Bank also announced its plans to raise ₹12,500 crore through an upcoming initial public offering (IPO) of its subsidiary HDB Financial Services. HDFC Bank, which holds a 94.6% in HDB Financial Services, will sell shares worth ₹10,000 crore via an offer-for-sale (OFS) in the HDB Financial Services IPO.

“HDFC Bank reported a 3% PAT beat at ₹168 billion / 1.9% RoA, primarily due to stable margins, contained opex, and provisions. After an upset in 1Q, deposit growth returned – up 15% YoY and 5% QoQ, but credit growth fell to a low of 7% YoY as the bank focused on LDR management (down by 375 bps QoQ to 100%) to allay regulatory concerns,” said Anand Dama, Senior Research Analyst at Emkay Global Financial Services.

The brokerage firm retained a ‘buy’ rating on HDFC Bank shares with a target price of ₹2,000 per share.

According to Nuvama Institutional Equities, HDFC Bank posted in-line Q2FY25 earnings with a small miss on NII offset by higher fees, lower opex and a write-back of AIF provisions.

“Its strong risk assessment once again comes to the rescue with the bank having gone cautious on PL+CC much ahead of the sector and now has an early mover advantage on growth in these segments. Asset quality and credit cost remained resilient versus an upswing for peers. The bank shall achieve the pre-merger LDR of ~86% in three years versus four earlier,” Nuvama Equities said.

It believes the negative of low loan growth is fully priced in while resilient credit quality and deposit share gains shall become key strengths in the current environment.

The brokerage firm reiterates a ‘buy’ call on HDFC Bank shares given the bank’s record of strong risk assessment and early risk aversion in unsecured loans compared with peers and improving deposit share. It raised HDFC Bank share price target by 6% to ₹1,950 apiece. 

HDFC Bank Stock Price

HDFC Bank stock price has remained flat and failed to give any significant returns this year. The stock has gained over 7% in three months, but is flat year-to-date (YTD). In the past one year, HDFC Bank share price has gained more than 13%.

At 9:40 am, HDFC Bank shares were trading 2.75% higher at ₹1,727.35 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.