HDFC Bank: The lender reported strong quarterly deposit growth in the March quarter, and as a result, HDFC Bank’s shares increased 2.9% to Rs 1,526.
With total deposits of Rs 23.8 trillion at the end of the March quarter, the bank reported in its quarterly business update that it had grown by 26.4 percent year over year (Y-o-Y) and 7.5 percent quarter over quarter (Q-o-Q).
Retail deposits increased by approximately 27.8% year over year and 6.9% quarter over quarter, while wholesale deposits increased by approximately 19.4% annually and approximately 10.9% sequentially.
Against a 0.02 percent decline in the BSE Sensex index, the stock was up 2.2% at Rs 1,515 per share at 10:50 AM.
One major concern for the stock in recent quarters has been the slow growth of deposits. It reported 1.9% Q-o-Q growth in deposits and 4.9% Q-o-Q growth in loans for the December quarter. As a result, its loan-to-deposit ratio increased to 110%, above 100%.
Before merging with HDFC Ltd., its LDR was approximately ~85%. Additionally, historically, HDFC Bank’s LDR ratio has ranged from 85 to 87 percent. After accounting for merger-related adjustments, the lender’s LDR in Q3FY24 was 89%.
“YES Securities analysts maintained a “less-than-bullish ADD” on the stock with a target price of Rs 2,000, citing the bank’s intention to drive deposit growth through branch addition as difficult to execute given the slow pace of branch addition (270 branches in the financial year so far compared with the intended 1,500 for the full year) and new branch locations being focused mainly outside Tier 1 centers (and hence, with low deposit potential).”
Nonetheless, those at Nirmal Bang anticipated that the LDR ratio would gradually increase, helped by the deposit growth rate exceeding the advancement growth rate (by about ~300–400bps).
Gross advances for the most recent quarter ended on March 31, 2024, with a total of Rs 25.08 trillion, representing growth of approximately 55.4% year over year and 1.6% quarter over quarter.
According to a statement released, the Bank’s advances increased by approximately 53.8% compared to March 31, 2023, and approximately 1.9% compared to December 31, 2023, after adjusting for transfers via inter-bank participation certificates and bills rediscounted.
Domestic retail loans saw a significant increase of about 108.9% compared to March 31, 2023, and a modest growth of approximately 3.7% compared to December 31, 2023. Commercial and rural banking loans experienced a year-on-year growth of about 24.6% and a quarter-on-quarter growth of around 4.2%. Corporate and other wholesale loans, excluding non-individual loans from the former HDFC Limited, grew by about 4.1% year-on-year but declined by 2.2% compared to the December quarter.
As of March 31, 2024, the bank’s CASA deposits had increased to around Rs 9.09 trillion, up 8.7% from Rs 8.36 trillion at the end of the March quarter of FY23 and approximately 8.8% from Rs 8.35 trillion as of December 31, 2023.
Y-o-Y and Q-o-Q increases in retail CASA were 8.8% and 6.3%, respectively. As of March 31, 2024, HDFC Bank’s CASA ratio was approximately 38.2%, down from 44.4% on March 31, 2023, and 37.7% on December 31, 2023.
Tech View on the Stock of HDFC Bank
The daily chart indicates that the HDFC Bank stock is testing the 100-day moving average of Rs 1,522 with today’s gap-up. Additionally, it has left the upper end of the Bollinger Band, which is located at the level of Rs 1,493.
The 14-day RSI indicator shows that the stock is testing the overbought zone, despite the bullish outlook displayed by the momentum indicators. So, going forward, the upward movement may be gradual. At its 200-DMA of Rs 1,558, the stock faces its next resistance.
The key resistance zones on the weekly chart are the 50-WMA (Rs 1,567) and the 100-WMA (Rs 1,541).
Meanwhile, the stock’s 20-DMA, or Rs 1,453, is the immediate support.
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