HDFC Bank shares settled over 2 percent higher on Monday after the lender reported 30 percent jump in net profit for the April-June quarter of FY24. On the Bombay Stock Exchange (BSE), the stock closed 2.07 percent higher at Rs 1,679.20 apiece, after reaching an intraday high at Rs 1,682.05 apiece. On the National Stock Exchange (NSE), the stock finished 2.06 percent up at Rs 1,678.35 apiece.

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According to analysts, better than expected HDFC Bank results made stocks advance. Notably, the lender posted standalone net profit at Rs 11,951.7 crore for the first quarter of FY24 versus CNBC-TV18 poll of Rs 11,433.5 crore. Other brokerages had also predicted a net profit around Rs 11,581 crore, which ofcourse was exceeded by the lender.

Interestingly, Nifty Bank broke above 45,100 mark after HDFC Bank reported earnings. At the time of settling, it surged 1.5 percent to 45,449.

HDFC Bank stock has increased 4 percent in the last one month and over 22 percent in the past one year. The lender has allocated over 311 crore new shares of the bank to shareholders of merged entity HDFC Ltd, according to a July 14 exchange filing by the bank.

Experts' take

Given the scenario, experts believe that this is a decent time to hold HDFC Bank's stock. Additionally, investors can go for fresh buying either above Rs 1,780 or around Rs 1,750 apiece levels.

Rajeev Thakkar, CIO & Director at PPFAS Mutual Fund said that HDFC Bank is among one of his larger holdings and he is quite positive for the lender as well as the overall private sector banking space in the coming period.

Similarly, market expert Prakash Diwan believes that this is a great opportunity to buy one of the most formidable balance sheet in the banking space globally and in the Indian context.

"The numbers tell that it's just the starting of a new era, which is going to be even better. I am quite positive and that's one reason why there is a lid on what the other banks stock performance has been doing ever since this merger has come about. The prices of other banks are not going anywhere. But HDFC Bank is going to garner a lot of attention and money. So, investors should jump in right away. Unless something is drastically wrong, I don't think investors need to change that stance," he told CNBC-TV18.

A look at numbers

Apart from decent profit, the bank's asset quality was also largely stable. The gross non-performing assets were at 1.17 percent of gross advances as on June 30, 2023 (0.94 percent excluding NPAs in the agricultural segment), as against 1.12 percent as on March 31, 2023 (0.94 percent excluding NPAs in the agricultural segment), and 1.28 percent as on June 30, 2022 (1.06 percent excluding NPAs in the agricultural segment). Net non-performing assets were at 0.30 percent of net advances as on June 30, 2023.

The bank’s net revenue grew by 26.9 percent to Rs 32,829 crore for the quarter ended June 30, 2023 from Rs 25,870 crore for the quarter ended June 30, 2022. Net interest income (interest earned less interest expended) for the quarter ended June 30, 2023 grew by 21.1 percent to Rs 23,599 crore from Rs 19,481 crore for the quarter ended June 30, 2022. Core net interest margin was at 4.1 percent on total assets, and 4.3 percent based on interest earning assets.

Recently, HDFC Bank’s merger with HDFC Limited became effective starting July 1. Based on the Q1 business update from the merged entities of HDFC Bank and HDFC Ltd, it is observed that deposits have increased by 16.2 percent compared to the previous year and approximately 1.2 percent compared to the previous quarter. Advances, on the other hand, have shown a growth rate of just over 13 percent year on year and approximately 0.7 percent sequentially.