In a surprising turn of events, HDFC Bank, India’s second most-valued stock, experienced its most severe daily setback since the onset of the Covid crisis three years ago, plummeting by 8.5%. This unexpected downturn led to investors losing over Rs 1 lakh crore, causing the market capitalization of this Nifty heavyweight to dwindle to Rs 11.67 lakh crore.
Worst Performance in 3 Years
This unprecedented dip marks HDFC Bank’s worst daily performance since the Covid-induced crash in 2020, recording an 8.5% fall. The magnitude of the drop has raised eyebrows, signaling concerns among investors and financial experts.
Q3FY24 Results Overview
HDFC Bank announced its October-December quarter results for the fiscal year 2023-24, revealing a 33% growth in net profit at ₹16,372 crore compared to ₹12,259 crore in the corresponding period the previous year. Despite this positive net profit growth, market reactions were heavily influenced by other performance metrics.
- Net Interest Income (NII) and Provisions: HDFC Bank’s Net Interest Income (NII) displayed a robust 24% year-on-year growth, amounting to Rs 28,470 crore during the quarter. Despite this positive performance, it fell below street estimates, impacting market sentiment. Concurrently, provisions witnessed a significant uptick, rising by 50% to Rs 4,216 crore, becoming a notable aspect of the Q3FY24 results.
- Non-Performing Assets (NPAs) and Asset Quality: The bank saw an increase in Non-Performing Assets (NPAs) to 1.26% in Q3FY24 from 1.23% in the previous fiscal. Despite this uptick, the net NPA dropped to 0.31% from 0.33% during this period.
Market Reaction to December Quarter Results
The disappointing results in the December quarter triggered a cascade effect, resulting in the reduction of target prices by various brokerages. The market responded to this downturn, attributing it to factors like Net Interest Margin (NIM) calculations and concerns about the bank’s balance sheet liquidity and loan mix.
Share Price Movement and Market Comparisons
Reflecting on HDFC Bank’s recent market performance, its share price exhibited a noteworthy gain of over nine percent in the past three months and just over 5.5 percent in the last year. A comparison with Nifty 50 and Bank Nifty highlights the disparity, with Nifty 50 witnessing a 12% rally in three months and a more than 23% surge in one year. Meanwhile, Bank Nifty recorded a rise of over nine percent in three months and 14.5 percent in one year.
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