HDFC Bank, Infosys shares slip up to 9% post Q4 results; should you buy the dip?

Private sector lender HDFC Bank and IT major Infosys, which together hold nearly 18 per cent weightage in the Nifty index, retreated up to 9 per cent after lower-than-expected financial results for the quarter ended March 31.

Where Infosys on April 13 after-market hours reported 12 per cent year-on-year (YoY) growth in net profit (after minority interest) at Rs 5,686 crore in Q4FY22, HDFC Bank on April 15 announced that its standalone net profit jumped 22.8 per cent to Rs 10,055.2 crore for the quarter ended March 31, 2022. Domestic equity markets were closed on April 14 and April 15 on account of public holidays.

Brokerage Kotak Securities projected a profit of Rs 10,478.20 for HDFC Bank and Rs 5,754.40 crore for Infosys. However, going with the latest research report post Q4 results, it seems that the fall post the financial results provide an opportunity for investors to lap up these stocks for the long term.

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For instance, LKP Securities retained its bullish view on HDFC Bank with a target price of Rs 1,831, indicating a growth of nearly Rs 30 per cent from the current market price of Rs 1,411.

“The management emphasised the slower net interest income (NII) growth will be compensated by lower specific provisioning expenses. We believe, superior underwriting practices, higher liquidity, adequate coverage and strong capital position makes the bank best in class and thus, we recommend ‘Buy’ on HDFC Bank.”

The bank’s Net Interest Income (NII) increased by 10.2 per cent to Rs 18,872.7 crore in the January-March quarter. The same stood at Rs 17,120.2 crore in the quarter ended March 31, 2021.

On the other hand, global brokerage firm CLSA also maintained ‘Buy’ on Infosys with a target price of Rs 2,040. “Infosys’ dream run paused Q4FY22 as a client-specific situation affected the revenue momentum, and thereby margins. While demand tailwinds should bring the revenue growth back on track soon – 13-15 per cent constant currency (CC) YoY revenue growth guidance for FY23 was ahead of expectations – margin recovery may take time given persistent supply-side pressures.”

“Infosys' position as the best scale services play on digital adoption remains intact given its best-among-peers organic revenue growth momentum. Infosys is part of the CLSA India Focus portfolio,” CLSA said in a report.

ICICIdirect maintained a ‘Hold’ rating on Infosys with a price target of Rs 2,000. Shares of Infosys plunged as much as 9 per cent to Rs 1,592.05 in the early trade. Following the sell-off in index heavyweights, the benchmark BSE Sensex tanked more than 1,200 points to around 57,132.

“Strong organic growth, consistent financials, industry-leading margins and healthy capital allocation policy prompt us to be positive on the stock,” ICICIdirect said.

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