HDFC Bank share reclaims Rs 1,100 mark after four months; here's why

HDFC Bank share price gained in early trade today after the private sector lender said its advances rose 21 percent year-on-year (YoY) in the April-June quarter to Rs 10,04,500 crore against Rs 8,29,700 crore in the year-ago period. In Q4 FY20, advances stood at Rs 9,93,700 crore.

Share of HDFC Bank was among the top Sensex gainers climbing 3.32% to Rs 1,109 compared to the previous close of Rs 1,074 on BSE. On March 11, the stock closed at Rs 1,112 on its path to hit 52 week low of Rs 738.90.  Since then, the share has traded below Rs 1,100 mark.   

The large cap stock opened 2.97% higher at Rs 1,106 today. The share trades higher than 5 day, 20 day, 50 day and 100 day moving averages but lower than 200 day moving averages. Its market capitalisation rose to Rs 6.12 lakh crore.

HDFC Bank plans to raise up to Rs 50,000 crore

HDFC Bank stock has lost 3.37% in one week. The large cap stock has lost 10.1% since the beginning of this year and 12.51% during the last one year. The stock has gained 7.53% in a month. Total 3.63 lakh shares changed hands amounting to turnover of Rs 40.26 crore.

The banking stock hit a fresh 52-week high of Rs 1,304 on December 19, 2019 and 52-week low of Rs 738.90 on March 24, 2020.

Jaikishan Parmar, Sr. Equity Research Analyst at Angel Broking said, "HDFC Bank has surprised the street by its advance growth numbers. Bank's advance grew by 21% YoY and deposit grew by 25% in Q1FY21. Bank's CASA ratio stood at around 40% as of Q1FY21, as compared to 39.7% in the year-ago and 42.2% at end of the Q4FY20. Even in this tough quarter, the bank lent Rs 10,797cr and was able to get deposit worth of Rs 42,000cr, which we believe largely because of the flight to safety. HDFC Bank has clearly gained market share in advance and deposit in lockdown period which we believe is positive for financial health.

We have a positive view on HDFC bank for long-term perspective considering its ability to raise deposit at a competitive rate, healthy capital adequacy ratio and market leadership position."

In Q1 of this fiscal, the lender's deposits grew 25 percent to Rs 11,89,500 crore against Rs 9,54,600 crore. In Q4 of last fiscal, deposits stood at Rs 11,47,500 crore.

The bank's CASA ratio stood at around 40 percent as of June 30, 2020, as compared to 39.7 percent in the year-ago and 42.2 percent at the end of March 2020.

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The private lender will hold a meeting of board of directors on July 18 to consider earnings for Q1 of the current fiscal. Its board will also consider raising up to Rs 50,000 crore via unsecured perpetual debt instruments, Tier II Capital Bonds and Long Term Bonds in the domestic market during the 26 AGM to be held on July 18. The fundraising would be done in one or more tranches.

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