HDFC Bank shares fell 8% in three days after Q1 net profit rose 5%. Margins shrank, knocking it to third-largest Indian firm by market cap.
HDFC Bank's stock slid for a third straight session on Wednesday, taking the three-day decline to 8.11% and erasing about ₹1 lakh crore in market value. The drop followed the lender's June-quarter results. Net profit edged up 5% to ₹19,060 crore. Margins narrowed and total income fell.
The bank reported net interest income of ₹33,530 crore for the quarter, a 7% increase from a year earlier. Net interest margin, a key profitability gauge, stood at 3.26% on total assets and 3% on interest-earning assets. That compression disappointed analysts tracking the bank. Several had expected NIMs to hold above 3.5% given HDFC's post-merger scale.
Operating profit declined to ₹28,169 crore from ₹35,734 crore in the same quarter a year ago. Total income dropped to ₹92,184 crore from ₹99,200 crore. The decline in operating profit, the sharpest in recent quarters, surprised some analysts.
The selloff over three sessions knocked HDFC Bank's market capitalisation to ₹11,59,950.98 crore, roughly $139 billion. That pushed the stock behind Bharti Airtel, now the second-most-valued Indian firm at ₹12,16,839.14 crore. Reliance Industries leads with a market cap of ₹17,44,141.25 crore.
HDFC Bank's standalone net profit growth of 5% came in line with expectations. The margin miss and weaker operating income shifted focus from stability to pressure. The stock ended Wednesday at ₹753.15 on the BSE, down 1.09% on the day after touching an intraday low of ₹750.25.
AlphaScala's proprietary model rates HDFC Bank at 38 out of 100, a mixed signal. Steady loan growth is offset by rising funding costs since the merger with its parent, and competition for savings accounts is keeping borrowing expenses elevated. See the HDB stock page for ongoing analysis and price targets.
The market cap ranking now places HDFC Bank third among Indian companies, a position it had not held since before the merger with HDFC Ltd. Bharti Airtel's shares have rallied on strong telecom revenue, while HDFC Bank's post-result slide has opened the gap.
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