HDFC Bank shares lost over 3% after the private sector lender reported its earnings for the quarter ended June 30, despite it being in line with the analysts' estimates.
HDFC Bank stock opened at Rs 2353 against the previous close of Rs 2375.95, recording a decline of over 1% in the early session and later fell over 90 points or 3.88% to the day's low at Rs. 2,283.55. HDFC Bank shares were among the top losers on the key benchmark indices.
HDFC Bank has formed a gap down chart pattern today and its stock price has lost 4% of its value since the last 4 trading days. It currently trades below the 30 and 50-day moving average but above 150 and 200-day moving average.
In a regulatory filing on Saturday, July 20, the net profit of the largest private sector lender in the country was at Rs. 5,568 crore during the April-June period, up 21% on a year-on-year basis.
Gross Non-Performing Asset (NPA) of the private lender increased by 4 bps quarter-on-quarter and 7 bps year-on-year, 'mainly owning to seasonally higher slippages continued from the Agriculture segment' stated Reliance Securities' report. 'Although a sharp rise in other income largely compensated for the higher provisions during 1QFY20' added Prabhudas Lilladher's report.
Additionally, escalated provisioning on the slowing of the economy, decelerating business growth, mainly in the retail sector and moderate loan growth were among the top key pointers highlighted in company's quarterly report analysis by the rating houses.
"Marginally tweaking our earnings estimates for FY20/FY21, we maintain our 'Buy' recommendation on the stock with a target price of Rs 2,650," Reliance Securities report on the private lender quoted stating that," We believe the bank is well-positioned to deliver healthy growth even in the current weak environment. Its strong capital position, improving operating efficiency and impeccable asset quality performance across cycles should continue to aid return ratios".
Meanwhile, Prabhudas Lilladher's report on HDFC Bank's Q1FY20 result said, " HDFCB earnings were lower than estimates as strong core operating performance was utilized by the bank to undertake much higher conservative provisioning on many segments and sectors of the loan book. Business growth was slower both from retail & wholesale with some segments slowed cautiously, while some on back of slowing economy." The rating agency has however maintained its rating at 'Buy' at CMP of Rs 2,376 with a target price of Rs 2,700, quoting that 'HDFCB remains our most preferred pick in banking universe as its core operating performance continues to be strong'.
Similarly, Jefferies retained buy call on HDFC Bank, stating that it's still one of the best-managed banks out there. Morgan Stanley maintained an overweight call on HDFC Bank at CMP 2,379.50, indicating it has a positive stance on the banks' balance sheet.
At 11: 55 am, HDFC Bank stock was trading at Rs 2289.65 on BSE, at a volume of 0.92 lakh shares, down 3.63%. Similarly, with 28.6 lakh share changing hands on the NSE platform, the stock is trading down by 3.77% at Rs 2,286.
(Rupa Burman Roy)
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