HDFC Bank share price: Should you buy, sell or hold post Q4 results? Here’s what experts say

HDFC Bank share price traded flat on Monday after the private lender reported its Q4 results, largely in line with Street estimates. HDFC Bank shares gained as much as 1.6% to ₹1,556.50 apiece in the early trade on the BSE.

The largest private sector lender in India, HDFC Bank posted a net profit of ₹16,511 crore in the fourth quarter of FY24, registering a growth of 0.84% from ₹16,373 crore in the previous quarter. 

The bank’s net interest income (NII) increased to ₹29,007 crore from ₹28,470 crore in the previous quarter, while core net interest margin (NIM) was at 3.44% on total assets and 3.63% based on interest earning assets.

Loans growth stood at 2% QoQ while deposits grew 7.5% QoQ. This led to a loan-to-deposit ratio (LDR) improvement to 104% from 110%. Liquidity Coverage Ratio (LCR) also improved to 115% from 110%, QoQ.

Read here: HDFC Bank Q4 Earnings 2024 Highlights: Net profit at ₹16,512 crore, Retail loans lead with 108.9% growth

HDFC Bank also declared a dividend of ₹19.5 per share for FY24.

Analysts believe the negative merger-led drags for HDFC Bank are largely behind and the lender would strive to improve its financial metrics from here on which would be driven by NIM expansion amid asset repricing, loan mix changes, rundown of high-cost liabilities, and stable asset quality trends. 

Here’s what brokerages have to say on HDFC Bank Q4 results and HDFC Bank share price: 

Jefferies

Jefferies believes the key positive in HDFC Bank Q4 results was a slight rise in NIM even as LCR rose. It expects loan-to-deposit ratio (LDR), which moderated to 104%, can move to 85%-90% over 4-5 years. 

The brokerage firm is of the view that the quality of unsecured and NBFC exposure is strong, while ROA should normalize towards 1.7% in FY26 and ROE of 15%.

Jefferies has a ‘Buy’ rating and raised HDFC Bank share price target to ₹1,880 from ₹1,800 earlier.

Motilal Oswal Financial Services

The gradual retirement of high-cost borrowings, along with an improvement in operating leverage, will boost HDFC Bank’s return ratios over the coming years, Motilal Oswal said. It estimates HDFC Bank to deliver a steady 18% CAGR in deposits and sustain a 13.5% CAGR in loans over FY24-26. It thus estimates HDFC Bank to deliver an FY26 RoA/RoE of 1.9%/15.5%.

Motilal Oswal retained a ‘Buy’ rating on HDFC Bank shares with a target price of ₹1,950 per share.

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Nuvama Institutional Equities

Nuvama Institutional Equities believes HDFC Bank delivered in-line NII and nullified one-off income with one-off expenses, including floating and ex-gratia provisions. LDR and LCR, the key monitorables, improved with high deposit and low loan growth. Q4FY24 was in-line after two soft quarters, which is comforting.

“We view Q4 as good for it on both core PPOP, prudent use of one-time gains, a comfort after two volatile quarters. We see long-term franchise value in it but also believe short-term price performance shall depend on consistency of quarterly earnings. As it shall have to carry incremental LDR at higher than normalised level, expect earnings volatility to persist for a year,” said the brokerage firm.

Nuvama Equities cut its EPS estimates by 2% and 3% for FY25E and FY26E upgraded the stock to ‘Buy’ from ‘Hold’. It also raised HDFC Bank share price target to ₹1,760 per share from ₹1,735 earlier.

“While we see long-term franchise value, we believe short-term price performance shall be driven by the consistency of quarterly earnings. With LDR above 100%, we reckon volatility in quarterly earnings shall persist for some time,” Nuvama Equities added.

Antique Stock Broking 

HDFC Bank saw improvement in LDR, LCR, and NIMs in Q4, which is a positive, but some of these were on account of seasonal factors/ end-of-the-quarter flow hence sustenance of these performances would be the key to stronger re-rating, the broking house noted. 

HDFC Bank’s core performance was a tad better than estimates but as NIM can be under pressure in the near term, Antique Stock Broking reduced its FY25 earnings estimates by 2.5% while it largely maintained FY26 estimates. It expects the bank to clock an RoA of 1.8% and RoE of 15%-16% over FY25 and FY26.

It maintained a ‘Buy’ rating on HDFC Bank stock with a target price of ₹1,850 per share.

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Phillip Capital

As the merger benefits accrue over a period, the intermittent period will see focus on balance sheet management leading to moderate growth. The return ratios have stabilized to new medium term normal. We remain constructive from medium to long term perspective, building earnings growth of 7%/15% for FY25E/26E with ROA of 1.8%/1.8% respectively. At CMP, the core book trades at 2.1x/1.9x 25e/26e ABVPS of ₹642/712, thus valuing the subsidiary at ₹196 per share, Phillip Capital said.

It maintained a ‘Buy’ call on the stock and cut the target price to ₹1,800 per share from ₹1,920 earlier.

Emkay Global Financial Services

As per HDFC Bank’s management, ramping up retail deposits and margin management amid potential pressure from lower incremental LDR/inorganic PSL build-up (from Oct-25) to meet sub-targets will take precedence over credit growth going ahead, Emkay Global noted.

Factoring in slower growth, the brokerage has trimmed its earnings estimates for FY25-26E by ~7%. However, it retained a ‘Buy’ call on the stock and cut the target price to ₹2,000 per share from ₹2,100 earlier.

HDFC Bank share price has gained 5% in one month, while it has fallen 11% year-to-date (YTD). 

At 9:20 am, HDFC Bank shares gave up early gains and were trading 0.50% lower at ₹1,523.60 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.