Rs 1 lakh crore m-cap gone as HDFC Bank shares crack 8% in 4 days

Disappointment over a higher-than-expected drop in net worth and concerns over near-term asset quality, margins and return on asset (RoA) intensified weakness on India's third-valued stock HDFC Bank, as it tumbled 8 per cent in four straight sessions. In the process, the scrip lost nearly Rs 1 lakh crore in market capitalisation (m-cap) in the four-day fall.

The banking stock has fallen 7.98 per cent to Rs 1,529.20 apiece on Friday compared with a close of Rs 1,661.90 on September 15. The m-cap for the private lender fell Rs 99,835 crore to Rs 11,59,154.60 crore on Friday from Rs 12,58,989.87 crore on September 15.

A host of brokerages on September 20 cut target prices on the stock, factoring in near-term pressures. Kotak Institutional Equities cut its targets to Rs 1,850 from Rs 1,925 earlier, Antique Stock Broking to Rs 1,925 from Rs 2,025, Phillip Capital to Rs 1,880 from Rs 1,960 and Nirmal Bang to Rs 1,935 from Rs 2,140.

Read more: HDFC Bank Analyst Meet: 4 negative surprises lead to cut in share price targets

https://www.businesstoday.in/markets/company-stock/story/hdfc-bank-analyst-meet-4-negative-surprises-lead-to-cut-in-share-price-targets-398982-2023-09-20

Emkay Global noted that HDFC Bank has guided for calibrated growth in the near term with a focus on building granular liability to replace HDFC’s high cost borrowing and ramping-up the mortgage business from the bank’s platform, which coupled with reducing the regulatory drag should lead to margin/RoA normalisation.

"Factoring in incremental net worth adjustments, we have lowered our BVPS estimates by 1-2 per cent  but expect the bank’s RoA/RoE to improve from 1.9 per cent/15.8 per cent in FY24E (merged) to 2 per cent /17.3 per cent by FY26E, as merger synergies kick in," Emkay Global said.

JM Financial said it has incorporated the details into its “below consensus” FY24/FY25 EPS estimates by 1-2 per cent. It said it has adjusted its book value per share expectations lower given the lower opening net worth of HDFC. That said the brokerage retained its 'BUY' with a target price of Rs 1,850.

 

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