HDFC Bank share price falls 6% after Q3 results, market valuation leads to Rs 77,000 crore loss. Know why.

Today HDFC Bank share price declined by 6.48% and touched a low of Rs 1570 on BSE. The market capitalization of HDFC Bank stood at Rs 11,98,094.09 crore today against Rs 12,74,740.22 crore on Tuesday.


Shares of HDFC Bank Ltd fell 6%, leading to a decline of Rs 76,000 crore in market capitalisation, after mixed December quarter results. HDFC Bank recorded a beat in net interest income (NII) and trading gains, but a miss in fees and credit cost. The bank made a large contingency provision of Rs 1,200 crore per AIF, although the value was very large, Nuvama Institutional Equities said, adding that some of the large tax implications resulted in liquidation.

“We are reducing earnings by 5-6% for FY25E-FY26E. While the cut in core earnings is higher at 8% because of a 4% cut in credit growth, it is revised by the upper limit of non-core items. “The bank has exhausted its LCR, needs to reduce its LDR and deposit growth is slowing against guidance. Overall, we are lowering the share target to Rs 1,770 from Rs 1,730,” Nuvama said while downgrading the stock to ‘hold’.

Philip Capital said the results were directly due to the lack of surplus cash on the balance sheet, but added that the tight cash position was making it a challenge for the bank to raise deposits.

“The current run of asking rates for deposits is high, which may result in moderate to moderate credit growth. With cash flows easing and LDRs rising, there is scope for balance sheet finesse to protect margins, ” Ise said while he suggested a target of Rs 1,920 for the stock.

Motilal Oswal said HDFC Bank’s margins remained largely stable, slightly below expectations, although the bank deployed surplus cash and reduced LCR applications statistically.

“Loan growth was healthy, driven by growth in retail and continued traction in commercial and rural banking. Asset quality ratio improved, while PCR also increased to 75%. The bank has maintained a buffer of 0.6% of floating + contingent provision, which provides additional safety. Management suggests that NIMs will gradually improve over the coming years, coupled with improvement in operating leverage, which will enable the bank to deliver healthy profit ratios,” Ise said while adding to the stock’s outlook. Suggested target of Rs 1,950.

InCred Equities said there will be general pressure on deposit costs and margins in the coming quarters and that HDFC Bank is better placed because of its improved migration capabilities and command over loan pricing.


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