HDFC Bank Q1 result preview: Expect robust profits, business growth to continue; eyes on merger update

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

HDFC Bank Q1FY23 results expectations

Motilal Oswal analysts expect HDFC Bank’s net interest income to rise 16.1% on-year to Rs 19,740 crore in Q1; and net profit to grow 20% on-year to Rs 9,280 crore. However, the net profit estimate is lower than the preceding quarter. They expect HDFC Bank to post strong quarterly results with business growth seeing strong traction. Margin expansion will be an important metric while asset quality in agriculture and unsecured book along with slippages are the other key monitorables, they said. Motilal Oswal also expects HDFC Bank to report a 21.6% growth in loans and 19.3% in deposits in the April-June quarter. Gross NPAs are expected to be at 1.2%, down from 1.5% a year ago and Net NPAs are projected to be 0.3%. Motilal Oswal has a Buy rating on HDFC Bank stock with a target price of Rs 1,850 per share

Axis Securities too has a positive outlook on HDFC Bank and expects the quarterly results performance to be strong. It expects NII to be at Rs 19,512 crore, up 14.7% on-year; and Net profit at Rs 9,246 crore, up 19.6% from last year but down 8% sequentially. “NII to be supported by healthy loan growth; NIMs to remain stable QoQ. Fee income to support non-interest income. However, lower treasury income remains a drag,” Axis Securities said in a note. Commentary on merger with HDFC and NIM guidance are seen as key monitorables. Provisions are seen to be 29.6% lower from last year at Rs 3,400 crore.

ICICI Direct expects a 12.9% jump in NII of HDFC Bank to Rs 19,203 crore. Net profit is expected to come at Rs 9,720 crore, a 25.8% on-year growth. This will, however, be 3.3% lower on-quarter basis. ICICI Direct expects GNPAs to be 4.7% lower on-quarter basis and NNPAs to be 6.7% lower. “Credit growth is expected to remain strong at 21.6% YoY to | 13.95 lakh crore. Deposit growth is expected at 19% YoY and CASA ratio to be at around 46%,” ICICI Direct said. Analysts at ICICI Direct expect provision to decline to Rs 3,208 crore. ICICI Direct has a Buy call on HDFC Bank with a target price of Rs 1,650 per share.

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