HDFC Bank Q4 results tomorrow: Lender expected to post strong PAT growth, merger comments considered

HDFC Bank, India’s largest private sector lender, will announce its January-March quarterly results tomorrow. Investors will patiently await the bank’s quarterly performance, which holds an 11% market share, just behind the State Bank of India (SBI). The lender is expected to post strong profit growth, with various analysts expecting 18-30% year-on-year growth. Provisions should be reduced and loans should increase. HDFC Bank’s results will also be watched as the lender has proposed a merger with Housing Development Finance Corporation (HDFC) – a move that is expected to boost the bank’s market share.

Net Profit Expectations

Motilal Oswal: Rs 9,690 crores
Growth of 18.4% over one year; down 6.2% sequentially

Edelweiss: Rs 10,183 crores
Up 24% over the previous year; down 2% on a quarterly basis

Securities axis: Rs 10,378 crores
Up 26.8% year-on-year; Growth of 0.3% compared to the previous quarter

Kotak Securities: Rs 10,478.20 crores
Up 19% year-on-year; 1.3% sequential growth

Yes Titles: Rs 11,298.10 crore
Up 38% YoY and 9.2% QoQ

Net Interest Income Expectations

Motilal Oswal: Rs 19,380 crores
Up 13.2% over one year and 5% over one quarter

Securities axis: Rs 19,458 crores
Up 13.7% over one year and 5.5% over one quarter

Edelweiss: Rs 19,550 crores
Up 14% YoY and 6% QoQ

Yes Titles: 19,636.80 crores
Up 14.7% over one year and 6.5% over one quarter

Kotak Securities: 19,776 crore
Up 15.5% over one year and 7.2% over one quarter

Provision expectations

Kotak Securities: 3,134.90 rupees; Down 33.2% from last year
Titles axis: Rs 3,795 crores; Down 19.1% year-on-year
Edelweiss: Rs 3,300 crores; down 21% year-on-year

What to pay attention to

HDFC Bank will be the first among major lenders to release its quarterly results. Motilal Oswal analysts said HDFC Bank’s commentary on credit cards and fee revenue traction is a key thing to watch. Meanwhile, Axis Securities analysts are monitoring HDFC Bank’s growth prospects in each segment as well as comments on the credit card segment. The lender’s loan portfolio reportedly reached Rs 13.69 lakh crore in the January-March quarter.

Management’s comments on the proposed merger will be the key thing to watch. The merger of HDFC and HDFC Bank should lead to a diversification of the bank’s business profile, according to S&P Global. “The results of the combined entity could improve over the next three to five years. The merger will provide the bank with profitable cross-selling opportunities to HDFC Ltd.’s large customer base, particularly for high-yielding products such as unsecured loans. It would also generate more revenue from insurance and investment products,” they said earlier last week.

HDFC Bank remains a call to buy for Motilal Oswal, Edelweiss and Axis Securities.

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