13 September 2024
Retail Equity Research
CMP Rs. 1667
HDFC Bank Ltd Rating: Overweight
Banks
BSE CODE: 500180 NSE CODE: HDFCBANK
HDFC Bank (HDFCB) remains focused on sustainable
Company Data
growth through investments in infrastructure and dig-
Market Cap (cr) Rs. 12,70,159.18
ital enhancements. Although near-term growth may be
Enterprise Value (cr) Rs. 39,78,623.38
limited by the credit-deposit (CD) ratio, increased loan
Outstanding Shares (cr) 762.13
pricing thresholds are expected to improve asset qual-
ity and support margin recovery. Over the past year,
52 week high Rs. 1,794.00
the bank has successfully boosted its Retail, Commer- 52 week low Rs. 1,363.00
cial, and Rural Banking segments, improving their 1m average volume (lacs) 250.63
combined share to 81% and addressing previous Pri- Face value Rs. 1.00
ority Sector Lending Certificates (PSLCs) shortfalls. Consolidated (cr) FY22 FY23 FY24
The bank has reduced borrowings by INR 600 billion Sales 135936.41 170754.05 283649.02
in the past two quarters, including significant repay- Growth(%) 6% 26% 66%
ments of commercial papers. With another INR 600 EBITDA 81060.18 110057.22 112545.56
billion in high-cost borrowings maturing in FY25, this EBITDA Margin(%) 59.6% 64.5% 39.7%
will be replaced with deposits, bolstering the balance PAT 38,052.75 45,997.11 64,062.04
sheet and margins. Asset quality remains robust, with Growth(%) 20% 21% 39%
Gross Non-Performing Assets (GNPA) and Net Non- EPS 68.6 82.4 84.3
Performing Assets (NNPA) at 1.3% and 0.4%, respec- P/E 21.4 19.5 17.2
tively, supported by provisioning buffers of INR 124 P/B 3.3 3.1 2.4
billion and INR 145 billion. Despite slower loan growth EV/EBITDA 22.0 20.1 17.0
affecting near-term stock performance, HDFCB is ex-
ROE(%) 15% 15.9% 14%
pected to deliver steady growth, with projected Return
ROCE(%) 5% 5.7% 6.5%
on Assets (RoA) and Return on Equity (RoE) of 1.86%
ROIC(%) 5% 5.5% 7.7%
and 14.9% by FY26.
D/E 7.22 7.39 6.81
Concall Highlights
• Deposit Growth Concerns: Management expressed dissatisfaction with the deposit growth, which was below expectations, primarily
due to seasonal factors and unexpected outflows in current accounts, although monthly inflows increased by over 20%, signaling some posi-
tive momentum.
• Loan Growth and Profitability Focus: Loan growth lagged behind deposit growth, as management prioritized profitable growth over
aggressive expansion. They deliberately slowed unsecured personal loan growth and will look to ramp it up when market conditions become
more favorable.
• Margins and Pricing Strategy: Despite competitive pressures, the bank has maintained disciplined pricing, choosing not to engage in rate
competition. Instead, they are focusing on customer engagement and service delivery to sustain margins and attract deposits.
• Cost and Income Management: There was a one-off increase in staff costs due to compensation adjustments, but no further significant
rises are expected. Fee income was supported by third-party product sales, while credit recoveries and dividends from subsidiaries bolstered
miscellaneous income.
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Quarterly Financial Consolidated
Profit and loss account (Rs Cr)
Jun-23 Sep-23 Dec-23 Mar-24 Jun-24
Sales 51,168.14 75,039.10 78,008.17 79,433.61 81,546.20
Growth(%) 8% 47% 4% 2% 3%
Expenses 18,469.81 45,349.33 50,530.03 62,938.45 49,689.62
Operating Profit 32,698.33 29,689.77 27,478.14 16,495.16 31,856.58
Growth(%) 10% -9% -7% -40% 93%
Other Income 9,853.15 32,527.52 37,007.34 44,957.74 35,450.29
Depreciation - - - - -
Interest 25,954.76 41,249.91 43,242.37 43,691.51 44,579.50
Profit before tax 16,596.72 20,967.38 21,243.11 17,761.39 22,727.37
Tax 4,193.47 3,655.00 3,525.11 -251.48 5,539.32
Net profit 12,370.38 16,811.41 17,257.87 17,622.38 16,474.85
Growth(%) -2% 26% 3% 2% -7%
Financial Consolidated
Profit & Loss (Rs Cr)
Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Sales 1,22,189.29 1,28,552.40 1,35,936.41 1,70,754.05 2,83,649.02
Growth(%) 16% 5% 6% 26% 66%
Expenses 45,459.21 52,456.53 56,556.96 63,042.30 1,74,195.54
Operating Profit 76,730.08 76,095.87 79,379.45 1,07,711.75 1,09,453.48
Growth(%) 9% -1% 4% 36% 2%
Other Income 24,878.97 27,332.88 31,758.99 33,912.05 1,24,345.75
Depreciation 1,276.77 1,385.01 1,680.73 2,345.47 3,092.08
Interest 62,137.42 59,247.59 58,584.33 77,779.94 1,54,138.55
Profit before tax 38,194.86 42,796.15 50,873.38 61,498.39 76,568.60
Tax 10,898.59 10,939.38 12,722.48 15,349.69 11,122.10
Net profit 27,253.95 31,833.21 38,052.75 45,997.11 64,062.04
Growth(%) 22% 17% 20% 21% 39%
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Balance Sheet (Rs Cr)
Report Date Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Equity Share Capital 548.33 551.28 554.55 557.97 759.69
Reserves 1,75,810.38 2,09,258.90 2,46,771.62 2,88,879.53 4,55,635.56
Borrowings 13,33,041.45 15,11,417.62 17,84,969.53 21,39,211.91 31,07,502.74
Other Liabilities 71,430.27 78,278.83 90,638.60 1,01,783.03 4,66,296.27
Total 15,80,830.43 17,99,506.63 21,22,934.30 25,30,432.44 40,30,194.26
Net Block 4,775.65 5,248.35 6,432.07 8,431.35 12,603.76
Capital Work in Progress - - - - -
Investments 3,89,304.95 4,38,823.11 4,49,263.86 5,11,581.71 10,05,681.63
Other Assets 11,86,749.83 13,55,435.17 16,67,238.37 20,10,419.38 30,11,908.87
Total 15,80,830.43 17,99,506.63 21,22,934.30 25,30,432.44 40,30,194.26
Cash Flow (Rs Cr)
Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Cash from Operating Activity -16869.1 42476.45 -11959.6 20813.7 19069.34
Cash from Investing Activity -1402.94 -1822.7 -2051.23 -2992.18 16600.42
Cash from Financing Activity 24394.5 -7321.35 48124.02 23940.56 -3983.06
Net Cash Flow 6122.47 33332.4 34113.22 41762.08 31686.7
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