Shares of HDFC Bank soared 2% on the morning of April 4, buoyed by a robust business update for the quarter ending March 31, 2024. As the country’s largest private lender, HDFC Bank’s positive performance also propelled the Bank Nifty to reach a new high during early trading hours.
In its regulatory filing on April 3, HDFC Bank revealed that its gross advances reached a substantial Rs 25.08 lakh crore, marking a remarkable 55.4% increase from the previous year’s figures. This significant growth underscores the bank’s resilience and effectiveness in navigating market challenges.
At 10:08 am, HDFC Bank shares were trading at Rs 1,513.35 on the National Stock Exchange (NSE), reflecting investors’ confidence in the bank’s performance and future prospects. Despite facing a downturn earlier in the year, HDFC Bank’s current rally showcases its ability to rebound and outperform market expectations.
Notably, HDFC Bank’s domestic retail loans saw an impressive surge of 108.9% year-on-year, signaling robust demand and consumer confidence. Additionally, the bank reported notable growth in commercial and rural banking loans, which increased by 24.6% compared to the previous year. Corporate and other wholesale loans also witnessed a moderate growth of 4.1% year-on-year.
While HDFC Bank’s stock experienced a decline of over 10% year-to-date, it has outpaced the benchmark Nifty index, which saw a modest 3% gain during the same period. This divergence underscores HDFC Bank’s resilience and strategic positioning in the market, making it a standout performer despite prevailing market challenges.
HDFC Bank’s recent financial update reveals a robust growth trajectory, with deposits aggregating to an impressive Rs 23.8 lakh crore, marking a substantial 26.4% increase year-on-year. Notably, retail deposits saw a significant surge of 27.8%, while wholesale deposits also experienced healthy growth, rising by 19.4% from the year-ago quarter.
In response to the positive outlook, brokerages are optimistic about HDFC Bank’s future performance, advocating for a ‘buy’ stance on the stock. Prabhudas Lilladher, for instance, emphasizes the technical indicators signaling a bullish trend. The stock, after facing significant erosion from its peak of Rs 1,720, has consolidated within the Rs 1,360-1,470 range and is currently trading above its 50-DMA of 1,440, indicating a rectangle pattern breakout on the daily chart.
Furthermore, HDFC Bank futures witnessed short covering above 1,480, while the Daily VWAP level of 1,450 aligns closely with the 50-DMA. Analysis of the option chain reveals heightened activity among 1,500 CE writers, with over 8 lakh OI, along with significant exposure from 1,400 PE & 1,450 PE writers for this series.
Prabhudas Lilladher suggests a long position in HDFC Bank, citing support at 1,400 and projecting an upside target of 1,700 – 1,800.
Similarly, LKP Securities shares a bullish outlook on HDFC Bank, anticipating a turnaround for the lender despite higher operating expenses. With Return on Asset (RoA) expected to remain stable, the brokerage recommends a ‘strong buy’ with a target price of Rs 1,762, underlining the bank’s potential for sustained growth and value creation.
Sources: moneycontrol.com
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