Shares of the country's largest private lender - HDFC Bank - fell for ninth straight session on Tuesday. In the last nine sessions the stock has corrected nearly 19 per cent from high of Rs 1,656 to hit low of Rs 1,348 on the BSE, data from stock exchange showed. The stock has been facing selling pressure ever since its merger with mortgage lender HDFC was announced announced on April 4.
Meanwhile, on Saturday, the Mumbai-based lender announced its March quarter earnings. HDFC Bank's net profit came in at Rs 10,055 crore marking an increase of 23 per cent from Rs 8,186.51 crore during the same period last financial year. Jump in profit came on the back of sharply lower provisioning for non-performing assets (NPAs). Its provisions declined 29 per cent annually to Rs 3,312 crore from Rs 4,694 crore in the year ago period.
HDFC Bank's net interest income or the difference between interest earned on loans and interest expended on deposits advanced 10 per cent to Rs 18,872.74 crore from Rs 17,120 crore in the same quarter last year.
The bank's asset quality saw an improvement as its gross non-performing assets as a percentage of total advances came in at 1.17 per cent in March quarter compared with 1.26 per cent in the previous quarter. In absolute terms, gross NPAs stood at Rs 16,141 crore versus 16,013.55 crore.
“Shares of HDFC Bank, which fell for the ninth consecutive trading session today, are unlikely to see any short-term recovery after a miss on quarterly earnings. The stock has corrected for about 20 per cent in the last 9-10 days in spite of the merger news. March quarter earnings growth at 23 per cent YoY was mainly driven mainly by lower provisions and net interest income (NII) growth was not up to the expectations,” said Manoj Dalmia, Founder and Director at Proficient Equities
“Currently the stock is approaching a support area and that can be used to accumulate the stock. Investors are advised to buy HDFC Bank on dips. The stock is under temporary selling pressure due to the result declaration, it might soon recover as we expect this stock to regain its momentum and reach Rs 1,650 levels again in the coming months,” Dalmia added.
“As we can see from management's confirmation, the merger will benefit from 2024 to 2025, a long period, which is why profit booking is coming in stock while the results are weak. As a result, it may show a greater negative impact of 5 per cent,” said Ravi Singhal, Vice Chairman at GCL Securities.
Ravi Singh, Vice President and head of Research, ShareIndia said, “the overall sentiment in the market is negative especially for the banking sector which is in correction mode. HDFC Bank may also further correct up to Rs 1,300 – 1,280 levels. However, long term investors need not to worry about the current volatility.”
