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HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

HDFC Bank share price:-Due to the list meet, the heavyweight share of private banking sector HDFC Bank is in focus. After opening with a gap-down on September 20, the stock fell by about 4% intraday.

The balance sheet of HDFC Bank has crossed Rs 25 lakh crore. After the merger, the bank will get many big benefits in the coming years. Brokerages and experts are quite bullish about this stock. The management also expects excellent growth.HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

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HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?
HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

HDFC Bank Share News

Due to the list meet, the heavyweight share of private banking sector HDFC Bank is in focus. After opening with a gap-down on September 20, the stock fell by about 4% intraday. What is the reason for such a huge fall in the stock? What impact will be seen on the company’s business after the merger? The research team of Zee Business has prepared a special report on this. Also, what should investors do in shares? For this, there are also details of global brokerage’s rating and target on the share.HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

What will be the impact on business after the merger?

There will be a reduction in NIMs of banks.
Reduction in NIM by 20 to 25 bps due to higher liquidity at the time of merger with HDFC Ltd.
HDFC Ltd has liquidity of up to Rs 1 trillion by the end of Q1
Bank’s NIM may come down from 4.1% to 3.7% to 3.8%
Bank’s NIM to reduce from 4.1% to 3.5% in Q2FY24
Nomura cuts FY24 NIM estimate by 25 bps and FY25 NIM estimate by 15 to 20 bps
NIM may remain under pressure for the next 2 to 3 quarters
Impact on NIM expected to stabilize from FY25

Netwoek 

HDFC Ltd’s net worth decreased, it stood at Rs 1.12 trillion at the end of June compared to Rs 1.34 trillion in March.
Decrease in net worth due to changes in accounting
HDFC Bank’s BVPS reduced from 525 to 519 in the beginning of July.

Impact on loans and advances

Bank loans and advances stood at Rs 22.2 trillion on July 1
Estimate of 12% growth in 9MFY24
Estimate of further 17% CAGR
Decrease in loan growth due to slow growth in HDFC’s mortgage business.
Impact of decline in HDFC’s wholesale book

Other effects on the bank

GNPA will increase from 1.2% to 1.4% and NNPA will increase from 0.3% to 0.4%.
Due to increase in HDFC’s NPA, HDFC bank’s NPA is bigger.
HDFC’s ROA in FY23 was 2.4% in IND AS which fell to 1.8% in IGAAP.
HDFC ltd’s cost to income ratio increased
increased from 10% to 19%

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Brokerage on HDFC Bank Share

Nomura on HDFC Bank (CMP: 1629)
Double Downgrade to Neutral from Buy, Target cut to 1800 from 1970

JP Morgan on HDFC Bank (CMP: 1629)
Maintain Overweight, Target cut to 1900 from 2000

Jefferies on HDFC Bank (CMP: 1629)
Maintain Buy, Target cut to 2030 from 2100

HSBC on HDFC Bank (CMP: 1629)
Maintain Buy, Target cut to 1930 from 2010

Balance sheet crosses Rs 25 lakh crore

HDFC Bank shares closed at Rs 1652 last week. The highest level of 52 weeks is Rs 1757 and the lowest level is Rs 1365. The market cap of the bank is Rs 12.5 lakh crore. Based on the results released by the bank in the June quarter, the total balance sheet is Rs 25 lakh crore. In June 2022 it was worth Rs 21 lakh crore. Total deposits stood at Rs 19.13 lakh crore. Total advance was Rs 16.15 lakh crore. The bank’s network is of 7860 branches. There is a network of 20352 ATMs. A total of 1.82 lakh employees work in the bank.

FII has increased stake

On the basis of June quarter, the share of FII i.e. foreign investors is 33.38 percent and DII i.e. domestic institutional investors’ share is 26.99 percent. In the March quarter, DII’s stake was 28.33 percent and FII’s stake was 32.24 percent.youtube HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

17-18% growth expected in FY2024

ICICI Direct said in its report that HDFC Bank has been performing continuously. Net interest margin has been around 4 percent and ROE i.e. return on equity has been around 15 percent. The brokerage said that the focus of HDFC Bank is to increase distribution. The focus of the bank is now on semi-urban and rural areas. After the merger, the number of branches has increased to 7860. The bank is moving forward on the strategy of doubling the branch number between FY22-25E. With this the business of the bank will grow rapidly. The management believes that the volatility after the merger will gradually go away. The integrated entity will register growth of 17-18 percent in FY2024.

What target has the brokerage given?

The brokerage said in its report that the three-year average growth of HDFC Bank between FY19-FY22 has been 10 percent for NII and 12 percent for PAT. The average growth of net interest income between FY22-25E is expected to be 17 percent and profit growth to be 21 percent. On this basis, the brokerage has given a target of Rs 2050 for the next 12 months. This is 25 percent more than the current level.HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

What is the challenge before HDFC Bank?
If we look at the challenges of HDFC Bank in terms of long term, the capital expenditure of the bank has been high due to branch expansion and it will remain high now. Before the merger, the cash deposit ratio was 85-88 percent. After the merger, the cash-deposit ratio has reached 120 percent. It is expected to become normal in the next 3-4 years. Improvement in CD ratio will improve the bank’s margins.

Secured loan will improve asset quality
Value Research said in its report that home loan customers are more important in providing stability to the balance sheet of any bank. Home loan is secured. Personal and credit card loans are unsecured. The average deposit of home loan borrowers is 5-7 times higher than that of retail loan borrowers. You will be surprised to know that 70 percent of HDFC customers were those whose banking is not with HDFC Bank. HDFC Bank will get big benefits after the merger. There will be a boom in overall business.

HDFC Bank will benefit from housing loan demand
After the merger, HDFC Bank CEO Shashidhar Jagadishan had said that every 4 years we will create a new HDFC Bank. The bank has a distribution network, adequate capital, asset quality healthy, profits excellent. All these strong indicators will strengthen the confidence of investors in the coming times. The CEO believes that there is immense potential in the housing industry right now. The bank will get big benefit from this. HDFC CEO Keki Mistry had said that the outlook for housing and housing loans in India is very strongHDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

                                        Conclision

The advice to invest in stocks here is given by the brokerage house. These are not the views of Zee Business. Consult your advisor before investing.HDFC Bank share price :Why did HDFC Bank fall sharply? What should investors do?

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