HDFC Bank m-cap crosses Rs 8-trillion mark; stock zooms 30% in 3 months

HDFC Bank has joined the elite club of Rs 8-trillion market capitalization (market-cap) on the BSE, as its share price hit a new high of Rs 1,464 in Wednesday's early morning deals. HDFC Bank, which is at number three position in overall market-cap ranking of listed companies, has become the first lender to achieve the milestone.

Shares of HDFC Bank hit a fresh record high today after rising nearly 2 per cent on the BSE. At 09:17 am, HDFC Bank had a market capitalisation of Rs 8.02 trillion, the BSE data shows. In comparison, the S&P BSE Sensex was up 0.54 per cent at 44,765 points, also the index's record high.

Currently, Reliance Industries leads the pack with Rs 13.34 trillion market-cap, followed by Tata Consultancy Services with Rs 10.19 trillion market-cap, data shows. Hindustan Unilever is fourth with Rs 5.08 trillion market-cap, followed by Infosys with Rs 4.83 trillion market-cap, BSE data shows.

In the past month, HDFC Bank has outperformed the market by gaining 17 per cent, against 10 per cent rise in the S&P BSE Sensex. In three months, the private sector lender's stock has rallied 30 per cent, as compared to 15 per cent gain in the benchmark index.

In the July-September quarter (Q2FY21), HDFC Bank had reported strong results with net profit growing 18.4 per cent year-on-year (YoY) at Rs 7,513 crore on the back of substantial growth in interest earnings and other income.

Net interest income (NII) of the bank for Q2FY21 grew 16.7 per cent YoY at Rs 15,776 crore, driven by asset growth of 21.5 per cent and a core interest margin for the quarter of 4.1 per cent. On asset front, gross non-performing assets (NPAs) of the bank fell to 1.08 per cent of the gross advances as on September 30, 2020, as against 1.38 per cent a year earlier. Likewise, net NPAs too came down to 0.17 per cent from 0.42 per cent.

“Digital initiatives and strong festive tie-ups are seen propelling retail credit growth ahead. This, coupled with healthy traction in corporate disbursement is seen keeping business momentum ahead of industry. Improvement in collection at 97 per cent and contingent provision at around 75 basis points of advances provides cushion from high volatility in asset quality and earnings,” analysts at ICICI Securities said result update report on October 18, 2020. The stock however, trading above brokerage target price of Rs 1,450 per share.

Overall business momentum for HDFC Bank remains healthy compared to the industry, but analysts at Emkay Global Financial Services believe that the asset quality trend and management transition will be the key things to watch out for in the near-to-medium term.