HDFC Bank Share Price In 3-Day Losing Streak, Lost Nearly Rs 1 Lakh Crore M-Cap; Buy?

HDFC Bank share price has been sinking for three consecutive days now and the latest downfall would be around 2% on Thursday. This week has broadly been bearish for HDFC Bank, with investors dumping its shares to the point the bank has lost nearly Rs 1 lakh crore of market value in 3 days. The sour mood in HDFC Bank comes after brokerages and analysts trimmed their target price of the bank on the back of muted FY24 estimates as shocks related to the merger of once NBFC-giant HDFC, will start to unfold.

HDFC Bank shares remain among the top bears and contribute heavily to dragging the performance of broader markets.

On September 21, the bank's share price dipped by 1.7% with an intraday low of Rs 1,538.05 apiece, which took the market cap of the lender to near Rs 11,50,892.22 crore. This would be a nearly Rs 33,857 crore drop in market cap compared to the previous day's m-cap of Rs 11,84,748.93 crore when the price level was at Rs 1,563.90 apiece.

HDFC Bank shares have been on a losing streak since September 18, diving by 7.5% in a three-day span. On September 15, last week, the bank's share price stood at Rs 1,661.90 apiece on BSE with a valuation of Rs 1,24,3535.63 crore. Hence, in three days, HDFC Bank has lost somewhat Rs 92,643.4 crore of market capitalisation.

HDFC Bank's 52-week high and low are at Rs 1,757.80 apiece and Rs 1,365.05 apiece respectively on BSE.

HDFC Bank's losses in three days contributed to 20% of Sensex's decline, while it accounted for 50% of Nifty 50's fall.

Sensex has lost over Rs 4.62 lakh crore of investors' wealth so far this week.

Bullish sentiment dimmed in HDFC Bank after its 'Analyst Day' where it gave perspective on the merged financials.

In the latest report, Gaurav Jani - Research Analyst, Prabhudas Lilladher said, "HDFCB at its analyst meet clarified certain aspects relating to merged financials. While transition to IRAC, credit policy harmonization and creation of DTL reserve would impact BVPS by 5%, gains emanating from stake sale of Credila could cushion capital by 1.2%. Creation of excess liquidity could affect Q2'24 NIM, although margins should bounce back in H2FY24E as credit growth picks up and liquidity is utilized."

Jani's note added, "FY24 NIM could contract YoY from 3.8% to 3.6%, however, as higher cost liabilities of HDFCL are replaced, NIM could enhance over FY24-26E from 3.6% to 3.8%. Merged loans/deposits as of Q1'24 were Rs22.2/20.6trn suggesting a 13%/16% YoY growth. While core earnings growth would be muted for FY24E (5.2% YoY) as NIM and loan growth normalize, core PAT may witness a 19.4% CAGR over FY24-26E. Basis core RoA at 1.75% for FY26E (ICICIB 1.94%) we tweak multiple from 3.0x to 2.8x but roll forward to core Sep'25 ABV. Retain BUY with TP at Rs2,025."

Further, as per Trendlyne data, the stock's Relative Strength Index (RSI) and Money Flow Index (MFI) are in the mid-range of 37.6 and 58.9 respectively. Also, its price-to-book value is at 4.08, which is high in the industry, while its 1-year beta is at 1.23 indicating very high volatility. Nevertheless, the average broker target is Rs 1,972.47, which is a potential upside of nearly 27%.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.