HDFC Bank shares vs PSU banks’ stocks: Here’s the difference in returns in last one year

Shares of private sector lender HDFC Bank Ltd have turned negative compared to the strong returns generated by the stocks of its PSU peers such as Canara Bank, SBI, Punjab National Bank, Union Bank of India and Bank of Baroda among others in both short and the long term.

HDFC Bank shares, which crashed post the lender’s Q3 earnings, are down 13.76% in a week. In six months, the stock has lost 13.59% and fallen 10.97% in a year. HDFC Bank shares hit their 52-week low in early trade today, extending losses from last week post Q3 earnings. HDFC Bank shares fell 2.61% to their yearly low of Rs 1440 today against the previous close of Rs 1478.65 on BSE. The banking stock is now trading at levels last seen in January 2021. The stock fell to Rs 1443 on January 22, 2021.

In comparison, the benchmark banking index Bank Nifty has zoomed 7.30% or 3,124 points in a year.

On the other hand, shares of the country’s largest lender State Bank of India (SBI) have performed better than their private sector counterpart. SBI shares have risen 4.04% in a year and gained 1.59% in six months.

Similarly, shares of Bank of Baroda have zoomed 26.77% in a year and gained 16.37% in the last six months. The stock is trading near its 52 week high of Rs 240 hit on January 4, 2024.

Stock of Punjab National Bank (PNB), which was hit by the Rs 10,000 crore scam and fell below Rs 30 in May 2020 has delivered strong returns of 79.35% and 62.76% in six months and a year, respectively. The stock hit its 52-week high of Rs 107.84 in the current session today.

Union Bank of India shares too have delivered strong returns, surging 71% and 54.72% in six months and a year, respectively. The stock is trading near its 52 week high of Rs 145.25 reached on January 20, 2024.

Shares of another govt lender Canara Bank delivered 38.14% and risen 45.16% in six months and a year, respectively. The stock hit its 52 week high of Rs 484.90 in the current session.

With the stock of HDFC Bank down 14% in week, the investors in the banking heavyweight have turned jittery. Here’s a look at what brokerages said on the outlook of the banking stock.

HDFC Bank is among BNP Paribas top pick with Axis Bank and ICICI Bank.

LKP Securities assigned a target price of Rs 1,762 on the stock on January 18.

"HDFC Bank is expected to overcome the merger overhangs gradually led by 1) healthy balance sheet growth, 2) much higher provision then regulatory requirement in the balance sheet, 3) best in class underwriting and risk management practices. Given these strengths, we expect HDFC Bank to remain one of the best among all the lending business. Thus, we continue to maintain BUY on the bank with revised target price of Rs 1762," said the brokerage.

Incred Equities on January 18 said HDFC Bank remains their high-conviction idea.

"Weak deposit growth/margin pressure is for all banks. HDFC Bank well-placed amid its command over pricing. Retain high-conviction ADD with a Rs 2,000 target price," said the brokerage.

"Post correction, HDFC Bank trades at an attractive risk-reward of 1.9x FY25F BV (standalone), considering the growth granularity and a superior business mix," added Incred Equities .

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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