HDFC Bank: Merger, valuation concerns may weigh in near-term, say analysts

HDFC Bank Q4 result analysis: We have seen a de-rating of the bank's multiple in recent years and we are again at a point where the risk of further de-rating is high, analysts say

Shares of HDFC Bank bled on the bourses on Monday as analysts foresee prolonged underperformance by the stock after a disappointing set of March quarter (Q4FY22) results. The stock tanked 4.7 per cent to Rs 1,395 apiece on the BSE as against a 2 per cent slide in the BSE Sensex.

According to experts, the stock is unlikely to be an outperformer among large banks in the near-term as the overhang of the merger with HDFC, and lack of differentiation in underwriting or return ratios post Covid are weighing heavily on the valuation multiple. Most brokerages have cut their target prices