HDFC Bank Q4 results preview: HDFC Credila sale to give profit a lift; margin seen flattish QoQ

India's largest private sector lender, HDFC Bank, is likely to report a 30-60 percent year-on-year (YoY) rise in net profit for the March quarter, led by a surge in non-interest income on account of stake sale in HDFC Credila. Analysts expect the bank's net interest income (NII) to jump 25 percent YoY but sees a flattish net interest margin (NIM) sequentially. Provisions are seen falling sequentially but would be up on YoY basis, analysts said.

Axis Securities expects HDFC Bank to report 30.8 percent YoY rise in net profit at Rs 15,755 crore compared with Rs 12,047 crore in the year-ago quarter. It expects NII to rise 25.7 percent YoY to Rs 29,356 crore, and pre-provision operating profit to record an increase of 31 per cent YoY at Rs 24,393 crore. Provisions for the quarter may come in at Rs 3,418 crore, down 19 percent QoQ, but up 27.3 percent over Rs 2,685 crore in the year-ago quarter, Axis Securities said.

"Margins are likely to remain stable sequentially. Stable Opex ratios and support from stake sale to non-interest income are expected to keep PPOP growth healthy. Asset quality to remain stable; credit costs is expected to be slightly lower QoQ," it said.

Sharekhan sees profit for the world's sixth-largest bank by market capitalisation rise 59.2 percent YoY to Rs 19,185 crore. It sees NII growing 25 per cent to Rs 29,213 crore. NIMs are expected to be flattish QOQ. Sharekhan said all eyes would be on the bank's net interest margin (NIMs) and loan/deposit growth outlook. Non-interest income is expected to be higher led by stake sale in HDFC Credila, it noted.

Motilal Oswal Securities suggested a target of Rs 1,950 on the stock. For the March quarter, it expects margins to remain broadly stable; asset quality for the merged entity is also expected to stay stable. Motilal Oswal said the guidance for business growth and earnings trajectory will be key monitorables.

The brokerage expects HDFC Bank to report a 29.9 percent YoY rise in net profit at Rs 15,653 crore. Net interest income (NII) to jump by 24.8 percent to Rs 29,144 crore.

Nuvama said the gain of Rs 9,600 crore from Credila sales by the bank should be booked in this quarter.