HDFC Bank Q1 Review - Business Growth Soft; Restoring Credit/Deposit Ratio Remains A Key Focus: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.HDFC Bank Ltd. delivered broadly in-line performance, with net interest margins improving 3 basis points QoQ, and the credit/deposit ratio declining 87 bp QoQ to 103.5%. Profit after tax increased 2.3% QoQ (5% beat), aided by lower provisions.Provisions were 10% lower than our estimate at Rs 26.02 billion, as the bank utilized Rs 4 billion of contingent provisions pursuant to the repayment of underlying loans. HDFC Bank is holding total provisions (floating and contingent) at Rs 269 billion and 1.1% of loans.Other income declined 1.5% QoQ (adjusted for Q4 one-offs) amid lower treasury income. Opex grew 0.9% QoQ (adjusted for one offs), while C/I rose to 41%.Gross non-performing asset ratio deteriorated 9 bp QoQ to 1.33%, while provision coverage ratio decreased 283 bp QoQ to 71.2%. Fresh slippages inched up to Rs 79 billion (1.5% of loans).Amid the increasing focus on restoring LDR to normalised levels, we cut our loan growth estimates to 9%/11% for FY25/FY26. We thus estimate LDR to improve to 98.5%/93.5% over FY25/FY26.We estimate HDFC Bank to deliver an FY26E RoA/RoE of 1.9%/15% and reiterate our Buy rating on the stock with a target price of Rs 1,850 (premised on 2.3 times FY26E adjusted book value plus Rs 256 for subsidiaries)..Click on the attachment to read the full report:.HDFC Bank Q1 Review - Broadly Inline; Non-Specific Provision Buffer At 1.5% Provides Comfort: Nirmal Bang.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

HDFC Bank Q1 Review - Business Growth Soft; Restoring Credit/Deposit Ratio Remains A Key Focus: Motilal Oswal

The brokerage estimates HDFC Bank to deliver 16% CAGR in deposits and a slower 10.1% CAGR in loans over FY24-26.

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HDFC Bank Q1 Review - Business Growth Soft; Restoring Credit/Deposit Ratio Remains A Key Focus: Motilal Oswal

The brokerage estimates HDFC Bank to deliver 16% CAGR in deposits and a slower 10.1% CAGR in loans over FY24-26.

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