HDFC Bank Q2 puts levers in place to undo stock underperformance: Analysts

HDFC Bank stock: HDFC Bank has made a good beginning after the merger, and given a huge pace of capacity building, we believe that there are levers in place to sustain this momentum in business growth

Weakness in HDFC Bank's net interest margin (NIM) might have bottomed out in the July-September quarter (Q2-FY24), analysts said on Tuesday, as most of the merger-related one-time adjustments have been done.

The bank, they believe, should be able to grow from here on, allowing the stock to reverse its underperformance.

"The weak NIM print was not unexpected given the merger and regulatory impact caused by the incremental cash reserve ratio (ICRR; 5-10 bps for the quarter). The regulation on ICRR, however, has now been withdrawn, which should result in it reversing in Q3-FY24," said analysts at Kotak Institutional Equities.