HDFC Bank in focus: Should you buy, sell, or hold India’s largest private bank’s stock after Q3 results? EXPLAINED

Source: Live Mint

HDFC Bank, the largest private sector lender in India, announced its Q3 results today, January 22. HDFC Bank reported a marginal 2.2% year-on-year (YoY) rise in Q3FY25 net profit, while its net interest income (NII) growth was 8% YoY. Margins are likely to remain stable QoQ with a slight positive bias. The bank’s asset quality weakened marginally in the December quarter as the Gross NPA increased. HDFC Bank’s share price gained after the announcement of Q3 results today.

In its Q2FY25 commentary, management outlined a strategy to lower the LDR to pre-COVID levels, resulting in slower credit growth compared to industry standards while focusing on deposit accumulation, which is evident in Q3FY25 performance. Despite muted credit expansion, steady deposit growth aligns well with the bank’s long-term goals.

Although there was a slight decline in asset quality, HDFC Bank has consistently maintained strong asset quality through disciplined underwriting and risk-calibrated lending. NIMs faced some pressure due to CASA accretion challenges, but the reduction of high-cost borrowings and improved operating efficiency are expected to enhance return ratios in the coming years. Moving forward, asset quality and credit growth will be key priorities, along with the bank’s strategic response to the RBI’s draft circular on lending overlap among group entities. Overall, HDFC Bank’s Q3FY25 results reflect a balanced performance amidst evolving macroeconomic conditions.

HDFC Bank’s share price is currently in ₹1610 to ₹1730 apiece range. So, those with HDFC Bank shares in their portfolio are advised to maintain a strict stop loss at ₹1610 and wait for the fresh breakout at ₹1730 on a closing basis. Once the stock breaks above ₹1730 decisively, HDFC Bank shareholders can upgrade their trailing stop loss to ₹1670 apiece. Fresh buying is advised only above ₹1730 for the short-term target of ₹1800 per share mark. However, after the breakout at ₹1730, fresh buyers must maintain a strict stop loss at ₹1670.