HDFC Bank Q1 Earnings Overview: Expect Strong Earnings and Continued Business Growth; eyes on fusion update

HDFC Bank, India’s largest private sector lender, is expected to post strong annual growth in net profit and net interest income when it announces its April-June quarterly results tomorrow (Saturday). Analysts also expect HDFC Bank’s provisions to decline along with NPAs (non-performing assets). Investors will also be eagerly awaiting management’s comments on HDFC Bank’s impending merger with Housing Development Finance Corporation, which was announced earlier. The merger received the green light from stock exchanges and the Reserve Bank of India. HDFC Bank’s share price has fallen by 11% so far this year to now trade at Rs 1,353 per share.

HDFC Bank Q1FY23 Earnings Expectations

Motilal Oswal analysts expect HDFC Bank’s net interest income to grow 16.1% year-on-year to Rs 19,740 crore in Q1; and net profit will increase by 20% year on year to Rs 9,280 crore. However, the net profit estimate is lower than the previous quarter. They expect HDFC Bank to post strong quarterly results as business growth gets strong traction. Margin expansion will be an important metric while asset quality in agriculture and unsecured books and slippage are the other key things to watch, they said. Motilal Oswal also expects HDFC Bank to see growth of 21.6% in loans and 19.3% in deposits in the April-June quarter. Gross NPAs are expected to be 1.2%, down from 1.5% a year ago and net NPAs are expected to be 0.3%. Motilal Oswal has a To buy rating on the HDFC Bank share with a target price of Rs 1,850 per share.

Titles axis also has a positive view of HDFC Bank and expects quarterly earnings performance to be strong. It expects NII to be at Rs 19,512 crore, up 14.7% year on year; and net profit of Rs 9,246 crore, up 19.6% from last year but down 8% sequentially. “NII needs to be supported by healthy loan growth; NIMs will remain QoQ stable. Fee income to support non-interest income. However, lower Treasury revenues remain a drag,” Axis Securities said in a note. Comments on merging with HDFC and NIM guidelines are seen as key things to watch. Provisions are said to be 29.6% lower than last year at Rs 3,400 crore.

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ICICI Direct expects a 12.9% jump in HDFC Bank’s NII to Rs 19,203 crore. Net profit is expected to reach Rs 9,720 crore, representing a growth of 25.8% year on year. However, it will be a decline of 3.3% on a quarterly basis. ICICI Direct expects ARPNs to be 4.7% lower on a quarterly basis and ARPNs to be 6.7% lower. “Credit growth is expected to remain strong at 21.6% YoY | 13.95 lakh crore. Deposit growth is expected to be 19% YoY and CASA ratio around 46%,” ICICI said. Direct. ICICI Direct analysts expect the provision to decline to Rs 3,208 crore. ICICI Direct has a To buy appeal to HDFC Bank with a target price of Rs 1,650 per share.