HDFC Bank shares recover from opening lows after Q3 business update, contribute to Nifty gains

Shares of HDFC Bank Ltd., India's largest private lender, will be in focus on Monday, January 6, after the company reported its December quarter business update over the weekend.

The stock was the biggest contributor to the Nifty downside on Friday, ending with losses of over 2.5%.

HDFC Bank's business update indicated an advances growth of 3% on a year-on-year basis. On a sequential basis, the advances growth was 0.9%. This is due to the bank's focus on bringing down the Credit-Deposit Ratio.

Deposit growth for the lender stood at 15.8% from last year and 2.5% on a quarter-on-quarter basis.

Credit-Deposit Ratio slipped below the 100% mark, declining to 99.18% from 111.53% last year. The management has guided for the Credit-Deposit ratio to come down to between 85% and 90%.

Nomura remains neutral on HDFC Bank with a price target of ₹1,870. It said that the loan growth has been soft but deposit growth was healthy. CASA deposits also saw a decline on a sequential basis.

On the flop side, Jefferies maintained a "buy" recommendation on HDFC Bank with a price target of ₹2,120.

The brokerage said that the valuations of HDFC Bank do factor in the soft growth for the lender. It said that the loan growth was soft due to a softer-than-expected pull back and a higher sell-down.

HDFC Bank had another positive year in 2024 in terms of returns, but three out of the last four years have seen single-digit returns for the lender.

Out of the 48 analysts that have coverage on HDFC Bank, 41 of them have a "buy" rating, while seven of them have a "hold" rating on the stock.

Shares of HDFC Bank ended 2.5% lower on Friday at ₹1,748.4. The stock is down 7% from its recent peak of ₹1,880.