Shares of HDFC Bank slipped nearly 4% in early trade on Friday, in sync with the broader market, amid concerns about lower-than-expected June quarter (Q1 FY25) business update. The sentiment was further dented as investors booked profit at higher levels.
Continuing its losing streak for the second straight day, HDFC Bank shares opened 2.2% lower at ₹1,688.95 after paring 2.25% in the previous session. In the early trade, the banking heavyweight declined as much as 3.83% to ₹1,660.30 apiece, while the market capitalisation dropped to ₹12.65 lakh crore.
Earlier this week, the share price of HDFC Bank touched its 52-week high of ₹1,791.90 on July 3, 2024, rebounding 31% from its 52-week low of ₹1,363.45 on the BSE. In the last one year and six month period, the stock has given flat returns, while it climbed over 7% in the past one month.
In a post-market release on Thursday, HDFC Bank said that it has posted a 52.6% year-on-year (YoY) growth in gross advances to ₹24.87 lakh crore in Q1 FY25. Sequentially, the figure was down 0.8% from ₹25.07 lakh crore in Q4 FY24, weighed down by drop in corporate and wholesale loans.
“Excluding the impact of the merger of erstwhile HDFC Limited with the Bank on July 1, 2023, the Bank’s gross advances grew by 14.9% over June 30, 2023,” it said in the regulatory filing.
During the quarter under review, retail loans grew by around ₹1.86 lakh crore; commercial & rural banking loans grew by around ₹7.2 lakh crore; and corporate & other wholesale loans were lower by ₹2.66 lakh crore over March 31, 2024.
On the other hand, total deposits grew 24.4% YoY to ₹23.79 lakh crore in June quarter of FY25, but was flat sequentially compared to ₹23.80 lakh crore as of March 31, 2024, due to seasonal factors in CASA accounts. “Excluding the July 2023 merger impact, the Bank’s deposits grew by 16.5% over June 30, 2023,” it adds.
For Q1 FY25, the private lender’s CASA deposits were ₹8.63 lakh crore, a growth of around 6.2% over ₹8.13 lakh crore as of June 30, 2023. This compares to ₹9.08 lakh crore as of March 31, 2024, which had a seasonal impact. Current account balances reduced by ₹4.25 lakh crore during the quarter.
As per the exchange filing, the bank’s advances under management, on an average basis, were ₹253.25 lakh crore for the June 2024 quarter, a growth of 54.1% over ₹164.39 lakh crore for the June 2023 quarter, and a growth of 0.8% over ₹251.25 lakh crore for the March 2024 quarter.
Earlier this week, HDFC Bank shares hit record high levels after its latest shareholding pattern showed that its foreign institutional investors’ (FIIs) ownership in the lender dropped below the 55% in June quarter, which, according to market experts, is likely to boost the banking heavyweight’s weightage in the MSCI index. As of June 30, 2024, FII’s shareholding stood at 54.83%, down from 55.54% in the previous quarter, which aligns with the MSCI Index’s requirement to maintain FII stake below 55.5%.
The reduction in FIIs holding to below 55% could be a significant weight change from 3.8% to 7.2% to 7.5%, potentially leading to inflows of $3.2 billion to $4 billion, as per Nuvama Alternative and quantitative research.
The foreign holding in HDFC Bank has favoured the stock (25.9% headroom versus requirement of 25%), leading to a potential weight doubling in the MSCI August 24 review, the research firm says in a note.
The forthcoming MSCI EM Index rebalancing will be in August, with the official announcement on August 13. However, price action is likely to occur pre-emptively, as speculation builds ahead of the release of the shareholding data, the research firm says in its note.
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