InvestorQ : How does the HDFC Bank June quarter results give outlook for investing in the stock?
Sam Eswaran made post

How does the HDFC Bank June quarter results give outlook for investing in the stock?

Answer
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Aashna Tripathi answered.
1 year ago


It is actually surprising how HDFC Bank manages to maintain the tempo of growth quarter after quarter. For the June quarter, the bank has reported a 21% growth in net profits to Rs.5568 crore. The growth of profits was driven by a strong 25% growth in net interest income (NII), even as the Net Interest Margin (NIM) remained stable at 4.3%. This is appreciable considering that HDFC Bank is the largest private sector bank book and the second largest in India. The gross NPAs were marginally up from 1.3% to 1.4% but that is understandable due to some very specific cases. In fact, to commemorate its 25 years since inception, HDFC Bank also gave out a special dividend of Rs.5/share.

The bank ha s also grown its advances book at 18% although the auto loan book grew by just about 8%, which is understandable considering the slowdown in demand in the auto sector. In valuation terms, the bank continues to trade in the upper percentile of the valuation range but that is understandable considering the consistency of growth that it has maintained over the last 40 quarters. Also, the special dividend should work in favour of the company in valuation terms. If you are holding on to the stock, you don’t even need to worry about selling the stock any time soon.