Is HDFC Bank still Attractive To The Markets?

HDFC Bank Ltd was recently seen in the top Nifty 50 gainers after crossing the 1500 mark after January 2024, the share price has corrected more than 13% from its 52-week high of Rs.1,757.50. The stock has underperformed in the last 1 year and has given negative results. In 2024, the stock declined by 15% against the Nifty 50 index.

Stock Performance 

HDFC Bank is the country’s largest lender by market value but comparing the financials on a year-on-year basis does not seem much important due to its merger with the parent company last year. It is anticipated that HDFC Bank will report a standalone net profit of Rs 15,800 crore for the March quarter, marking a substantial increase of 31.2% compared to the same period last year. This quarter has shown growth in incremental deposits, gross advances, retail loans, and commercial and rural banking. The two sectors that were seen facing difficulty were the corporate and wholesale loan sectors. 

Sector Placement 

System-level credit offtake is growing significantly, loan growth amidst positive signs of an improving economy, increased investment activity, and high demand. Although there are challenges in the banking sector, it seems like analysts are closely monitoring the financials and actions of the bank. In the history of the banking sector, HDFC Bank has proven to hold a strong position in the market maintaining good financials, focusing on risk management and creating a large customer base.

Conclusion: The banking sector is emerging as a transforming power for the economy and HDFC Bank Ltd being a part of it all for years now has taken several steps to make it better each financial year, with new services and products coming up, it is also seeing an eventual growth in the customer base. Fundamentally, even though the FIIs have trimmed their stake in the company this year (as per the shareholding), names like the Government of Singapore, the Government Pension Fund Global and Vanguard Total International Stock Index Fund have emerged as noticeable shareholders by buying 1-1.5% respectively. Other renowned analysts have also given a go-ahead for buying the stock but the way the price has corrected this year questions whether one should wait or take action on it.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.