HDFC Bank stock top Sensex gainer today, rallies 56% since March; all eyes on CEO succession

With today’s surge in the stock price, the total market capitalisation of HDFC Bank stands at Rs 6,26,111.37 crore

HDFC Bank share price surged 4.86 per cent to touch day’s high of Rs 1,152,65 apiece on Monday after the private bank posted a 19.6 per cent growth in net profit to Rs 6,658.62 crore in April-June quarter of the current financial year. The bank had reported a net profit of Rs 5,568.16 crore in the corresponding quarter of the preceding financial year. With today’s surge in the stock price, the total market capitalisation of HDFC Bank stands at Rs 6,26,111.37 crore. HDFC Bank shares have rallied 56 per cent from March lows of Rs 738.90 apiece. “Overall performance of the bank should remain steady and we expect the bank to offset near-term pressure on other income via tight control over opex. We expect HDFC Bank’s strong liability franchise and fixed-rate nature of the book to support margins even as it maintains higher liquidity to navigate through the crisis,” Motilal Oswal Financial Services said in a research report.

Post June quarter earnings, the research and brokerage firm has recommended to ‘buy’ HDFC Bank stock with a price of Rs 1,280, an upside of 16 per cent from the previous close. HDFC Bank’s net interest income increased 17.8 per cent in the first quarter of the financial year 2020-21 to Rs 15,665.4 crore from Rs 13,294.3 crore for the same period in the previous year. HDFC Bank has been able to deliver its usual earnings growth trajectory. “However, the COVID-19 pandemic has induced volatility on certain operating parameters like fee income and opex. This, in turn, has heavily dented loan origination across retail segments,” said Motilal Oswal.

At 9.55 AM, HDFC Bank shares were trading 3.89 per cent higher at Rs 1,141.95 apiece as compared to a 1.01 per cent rise in the benchmark S&P BSE Sensex. “HDFC Bank reported a mixed set of numbers for Q1FY21, on a positive front moratorium, opted 9% of advance, the cost to income declined 400bps to 35%, though it would not sustain, once lockdown completely opens some operating cost will increase. On the negative front, weak other income and retail advance grew 7.2% YoY and declined 3.9% QoQ,” said Jaikishan Parmar, Senior Equity Research Analyst, Angel Broking Ltd

In a virtual annual general meeting (AGM) held on Saturday, HDFC Bank’s Managing Director and Chief Executive Officer Aditya Puri has hinted at an internal successor. “He has been with us for 25 years my successor was always in place, at least in my mind,” Puri said. Last month, HDFC Bank had given three names in order of its preference to the Reserve Bank of India (RBI). “CEO succession remains an important event in the near-term and a key monitorable,” Motilal Oswal said.