HDFC Bank Shares See Uptrend Following Positive Q4 Update Reviews from Brokerages

HDFC Bank share price continued to witness buying interest on Friday, April 5, spurred by the positive reception to its March quarter business updates. The bank’s growth in deposits and improvements in the loan-to-deposit ratio led to an uptrend in the stock for the seventh consecutive session.

Several top brokerage firms, including Motilal Oswal Securities, Macquarie, HSBC, and Morgan Stanley, expressed optimism about HDFC Bank’s stock. The encouraging Q4 update from the bank, especially the better-than-expected deposit growth, contributed to the positive outlook on the stock.

Amid the positive assessments, HDFC Bank shares opened at Rs. 1,543 on April 5, reflecting a rise of about one per cent compared to the previous close of Rs. 1,527.90.

Macquarie, in its assessment, maintained an ‘outperform’ view on HDFC Bank with a target price of Rs. 2,000. The firm highlighted that the bank’s consolidation strategy appeared to be performing well, with corporate loan growth and the loan-to-deposit ratio showing favorable trends. Macquarie suggested that the stock is attractively valued and recommended adding it to portfolios.

On the other hand, HSBC, with a target price of Rs. 1,750, maintained a buy call on the stock. The firm noted that HDFC Bank’s Q4 deposit performance surpassed Street estimates, while the slowdown in loan growth and the reduction in the loan-to-deposit ratio were aligned with expectations.

HDFC Bank’s stock, post the March quarter business update, showcased decent gains, marking a turnaround from a year of subdued performance. While the stock had declined about 10 per cent in FY24, the broader market index Sensex soared by approximately 25 per cent during the same period.

Looking ahead, HDFC Bank is scheduled to announce its financial results for the fourth quarter of FY24 on April 20. The bank’s board of directors is set to convene on April 20 to approve the Q4 results.

In a notable disclosure, HDFC Bank stated that its gross advances in Q4FY24 rose by 55.4 per cent year-on-year to nearly Rs. 25,08,000 crore, with its domestic retail loans and commercial loans showing positive growth trends.

Moreover, as part of its financial activities, HDFC Bank revealed that it sold about 3 per cent stake in Indraprastha Medical Corporation through the secondary market route on NSE, entailing a cash consideration of Rs. 55.46 crore.

Furthermore, HDFC Bank witnessed a decline in foreign institutional investors’ (FII) ownership during the March 2024 quarter, reducing to 47.83 per cent from 52.39 per cent in the December 2023 quarter. This shift in ownership dynamics might prompt the entry of new foreign investors to compensate for the reduced FII stakes and maintain weightage in the MSCI index.