HDFC Bank: The fall in the stock stopped due to this decision of RBI, brokerage gave buy rating with target of Rs 2075.

HDFC Bank Stock Price: Today, the decline in HDFC Bank, the largest private sector lender, has stopped. Today this banking stock strengthened by about 2 percent intraday and reached Rs 1463 (HDFC Bank Stock Price), whereas on January 25 it had closed at Rs 1435. Actually, the Reserve Bank of India (RBI) has given its approval to Life Insurance Corporation of India (LIC) to acquire up to 9.99 percent stake in HDFC Bank. LIC has been advised by RBI to acquire majority shareholding in HDFC Bank within a period of one year, i.e. by January 24, 2025. After this, there has been buying in shares today. Two big brokerage houses are looking positive about the stock.

There was a continuous decline since the results

HDFC Bank’s quarterly results for the December quarter of financial year 2024 were weak. After which the stock had fallen by about 14 percent. However, today there has been some recovery. In the December quarter of the financial year 2024, the net interest margin (NIM) of HDFC Bank, the country’s largest lender in the private sector, has declined due to higher cost of funds. Higher provisions and earnings per share (EPS) growth in the third quarter were also weak. However, the management has expressed hope of further improvement in NIM. Lower liquidity coverage ratio (LCR) and slowness in deposit growth also spoiled the environment. Gross Non-Performing Assets (GNPA) stood at 1.26 percent in the December quarter, which was 1.23 percent in the same quarter a year ago. NII has increased by 4 percent on quarterly basis and profit has increased by 2.5 percent on quarterly basis.

Macquarie: outperform

Brokerage house Macquarie has maintained outperform rating on HDFC Bank and given a target of Rs 2075. According to the brokerage, the bank is on the right track for consolidation. The bank is bringing down loan growth and focusing more on Net Interest Income (NIM). According to the brokerage, in our view HDFC Bank needs to grow its deposits by 400 bps more than loans in the next 3 years to get back to pre-merger NIM. However, the brokerage says it may take a few more quarters to see improvement in NIM and core PPOP growth.

HSBC: buy

Analysts of brokerage house HSBC have given “buy” rating on HDFC Bank shares, but have reduced the target price from Rs 2080 to Rs 1950. The brokerage says we limit NIM expansion to 15 bps (basis points) in FY24-26 as against 30 bps earlier. Near-term earnings are expected to be under pressure and earnings per share (EPS) for FY24/25/26 will be cut by 0.8%, 7.8%, 5.8%. Management believes the bank is at the bottom of margin contraction and expects a 3.7 per cent recovery in 18-24 months.