HDFC Bank Boosts Banking Rally With Strong Q4 Business Update; Retail Loans Double YoY

Shares of HDFC Bank climbed 2 per cent on 4 April after the bank reported robust business performance for the quarter ended 31 March 2024. The stock led Nifty gains and drove Bank Nifty to a new high in early trading.

HDFC Bank revealed that its gross advances reached Rs 25.08 lakh crore, marking a remarkable 55.4 per cent increase from the same period last year, according to a regulatory filing on 3 April.

The bank reported a significant surge in domestic retail loans by 108.9 per cent YoY, while commercial and rural banking loans grew by 24.6 per cent. Corporate and other wholesale loans saw a moderate growth of 4.1 per cent compared to the previous year.

Deposits also witnessed substantial growth, aggregating to Rs 23.8 lakh crore, reflecting a YoY increase of approximately 26.4 per cent. Retail deposits rose by 27.8 per cent, while wholesale deposits grew by 19.4 per cent from the year-ago quarter.

In the March quarter, foreign institutional investors (FIIs) reduced their shareholding in HDFC Bank. As of 31 March 2024, FII holding stood at 47.8 per cent compared to 52.3 per cent in the December quarter. Notably, Vanguard Total International Stock Index Fund and the Government Pension Fund Global emerged as significant buyers during the quarter.

Market experts at Prabhudas Lilladher and LKP Securities maintain a positive outlook on HDFC Bank, suggesting a "buy" rating on the stock. They anticipate a turnaround for the bank, with Return on Asset (RoA) expected to remain stable despite higher operating expenses. Prabhudas Lilladher recommends a target price of Rs 1,700 - 1,800, while LKP Securities suggests a target price of Rs 1,762.