HDFC Bank stock records biggest intraday jump since Dec. What sparked the rally?
This strong rally has also propelled the benchmark Nifty 50 to reach another record milestone of 22,215 points. With its substantial 14% weightage in the Nifty 50, today’s surge in HDFC Bank’s stock contributed to 80% of the index’s overall gains.
The rally observed in HDFC Bank stock was attributed to the multiple positive developments. Global brokerage firm Citi has kept its ‘buy’ call on HDFC Bank with a target price of ₹2,050 per share. This indicates an upside potential of over 41% from today’s closing price.
Earlier, Morgan Stanley also retained its ‘overweight’ rating on the stock with a target price of ₹2,110 apiece.
Growth Strategy
The bank’s management emphasized prioritizing profitability and earnings per share growth over loan growth.
Also Read: Not eyeing growth just for the sake of market share, says HDFC Bank’s Jagdishan
India’s largest private sector lender, HDFC Bank, does not plan to grow “just for the sake of market share,” chief executive Sashidhar Jagdishan said on Monday. Jagdishan spoke to Rahul Jain, managing director of global investment research at Goldman Sachs India Securities Pvt Ltd, a replay of which is available on the bank’s YouTube channel.
“As I said, we are not in the quantity game at all; we do not want to grow just for the sake of market share. This is not a new philosophy,” said Jagdishan.
The bank’s strategy, according to Jagdishan, involves adjusting its risk-based pricing model to maintain these margins, accounting for the evolving cost of funds.
“To that extent, you will see our ALCO (asset liability committee) constantly raising the threshold level so that we do not go down the margin ladder. Incrementally, we are reasonably sanguine that we should manage that,” he said.
Jagdishan also touched upon the bank’s cautious approach to deposit growth, especially during periods of tight liquidity when deposit rates for larger amounts tend to rise. The bank has chosen not to chase high-cost deposits, he said, adding, “This means that not only did we not participate, we had to give up some of the ones that were there and came up for maturities.”
Also Read: Nifty 50 at a record high, up 13% in 3 months; is it time to book profit?
Earlier on February 16, the bank announced that it recorded stable and healthy double-digit year-on-year (YoY) growth in its home loan business after the merger till December 31, 2023.
The bank said that it recorded 3.6% sequential growth as of December 2023, and, after the merger, savings accounts for incremental disbursals have moved to 80% from 35%.
It also added that the bank’s market share has grown by 18–20% on incremental disbursals. On a sequential basis, the bank has gained a leading position as it recorded a growth of 3.6%, which was the highest among its peers in home loans.
By mid-March, the bank will be launching a seamless straight-through journey for home refurbishment loans, which can become a strong product offering for customers. Also, by April 2024, the bank proposes to launch a home Saver product.
Also Read: These 3 Nifty 50 stocks hovering near their 52-week lows; what should you do?
Meanwhile, the stock witnessed significant selling pressure after the bank’s release of its Q3 numbers, which fell short of analyst estimates. Between January 16 and February 14, the stock lost 17.56% of its value. Although it partially recovered in recent sessions, it remains 13.40% below pre-Q3 announcement levels.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
Published: 20 Feb 2024, 05:56 PM IST
