HDFC Bank Q1 FY23 results are out! Check out the detailed analysis here.
India’s leading private sector bank, HDFC announced its Q1FY23 results on the 16th of July. HDFC Bank is the third largest company on the Indian stock exchanges by market capitalisation. The banking conglomerate which is eyeing a mega-merger with its parent HDFC serves millions of Indians.
Don’t miss its results.
Here is a quick snapshot of HDFC Bank Q1 FY23 results.
- 😊Net profit of the bank was up 21.1% from the year-ago period in Q1FY23 to ₹9196 crores.
- 😊The core margin remained stable at 4% on a sequential basis.
- 😊The yield on advances was up by 18bps over the previous quarter (Q4 of FY22) standing at 8.3%.
- 😊Business momentum for the quarter was robust with a pick-up in retail lending. On a YoY basis, overall advances grew by 21.6% in Q1FY23 compared to 20.8% in Q1FY22, highlighting a 0.8% growth YoY.
- 😊Commercial and rural banking portfolio leaped, standing at 29% YoY, while wholesale portfolio increased by 16% YoY in Q1FY23.
- 😊The bank has added 36 new branches during the quarter and 250 branches are in the stage of completion in Q1FY23.
- 🙁 The bank during Q1FY23 reported an 8.5% sequential decline in net profit at ₹9196 crores. It had a lower operating income due to its Q1FY23 performance being marked by treasury loss.
- 🙁 GNPA stood at 1.03% as compared to 1.01% QoQ, indicating an increase in the non-performing assets.
- 🙁 The slippage ratio increased from 1.3% to 2.1%, and the slippage quarter increased from ₹4,000 crores to ₹7,200 crores due to the agriculture portfolio.
Valuation and Outlook
Q1FY23 performance of the bank was marked by treasury loss, resulting in lower operating income. However, the core operating profit growth of the bank was healthy at 15% YoY. The margin of the bank was stable. Given the sharp movement in interest rates, the bank has recorded treasury loss. But this is not worrisome as it will not have a credit cost impact. Momentum on the business growth front leading to market share gain, adoption of digital capabilities, and aggressive focus on liability profile will lead the bank to deliver a steady state RoE profile of 16-17%. We marginally reduce our FY23-24 estimate by 3-4% and maintain our Buy rating on the stock with a revised target price of ₹1,847 (earlier ₹1,864), based on 3.4x FY24E P/ABV.