HDFC Bank's deposit mobilisation in the March quarter was strong has been strong, reflecting the strength of the franchise but a continued need to bring down its LDR will weigh on medium-term loan growth, analysts said post HDFC Bank's Q4 business update.
Nomura India said it is currently building in a 15 per cent loan CAGR over FY24-26F, which has downside risks. It reiterated its 'Neutral' rating on the stock with a target of Rs 1,625. HSBC has a target of Rs 1,750 on the stock, Morgan Stanley sees it at Rs 1,900 and Macquarie at Rs 2,000.
Nuvama in its Q4 preview note said that HDFC Bank's deposit growth was strong but loan growth stayed soft. This, it said, is part of the conscious consolidation strategy pursued by the bank and not due to a dearth of growth.
InCred Equities said credit to deposit ratio (CD/LDR Ratio) for the bank has improved to 105.3 per cent against 111.5 per cent in December 2023, which provides comfort. It expects margins for the bank will remain within expected range of 370 basis points despite surge in deposit growth, as the bank is seen repricing retail assets accordingly.
"We remain confident over asset quality profile of the bank and expect operating leverage may surprise positively during the quarter," InCred said while suggesting a target of Rs 2,000 on the stock.
Motilal Oswal Securities suggested a target of Rs 1,950 on the stock.
"Despite the moderate growth in advances, the anticipated rise in the bank's deposits has gained momentum, with a quarterly growth rate of 7.5 per cent supported by a healthy increase in CASA deposits by 8.8 per cent QoQ. The bank initially experienced a higher CD ratio, following a merger; however, with the progress made in deposits mobilisation in 4Q, the CD ratio moderated 6 per cent QoQ to 104 per cent," it said.
For the March quarter, it expects margins likely to remain broadly stable; asset quality for the merged entity is also expected to stay stable. Motilal Oswal said the guidance for business growth and earnings trajectory will be key monitorables.This brokerage is expecting HDFC Bank to report 29.9 per cent YoY rise in net profit at Rs 15,653 crore. Net interest income (NII) is seen rising 24.8 per cent to Rs 29,144 crore. Nuvama said the gain of Rs 9,600 crore from Credila sales shall be booked this quarter.