HDFC Bank has released its Q1 results, with a focus on deposit growth and balancing advances. The bank aims to grow its deposits faster than its credit. Yes Securities maintains a cautious 'Add' rating on HDFC Bank and has revised its price target to Rs 1925. Dolat Capital predicts slower loan growth for HDFC Bank. ICICI Securities sees IndusInd Bank well placed on growth and net interest margin. Motilal Oswal notes steady business growth and reasonable valuations for DCB Bank. Stocks to watch include HDFC Bank, Kotak Mahindra Bank, JSW Steel, Vedanta, Wipro, YES Bank, RIL, Punjab National Bank, and SBI.
Kotak Mahindra Bank has reported its Q1 results, showing a rise in standalone net profit of 81% YoY to Rs 6,249 crore. This increase was aided by a one-time gain from the divestment of a 70% stake in its general insurance arm, amounting to Rs 3,512 crore. The bank's net interest income also rose by 9.7% YoY to Rs 6,843 crore. However, provisions for the quarter rose by 59% to Rs 578.4 crore. The gross non-performing asset (NPA) ratio remained flat at 1.39% sequentially, while the net NPA ratio also stayed flat at 0.35%. The net interest margin (NIM) declined to 5.02% (-26 bps QoQ). Despite this, the bank's loan growth was at 19% YoY. Credit costs rose to 0.55% in Q1, and customer acquisition slowed down to approximately 1 million customers. The return on assets (RoA) fell to 2.38% from 2.97% in Q4. Emkay Global has raised the target price for Kotak Mahindra Bank to Rs 1,700 apiece from Rs 1,625 earlier, implying a potential upside of 4.6% from the previous close. Shares of Kotak Mahindra Bank opened lower after its net interest margin narrowed in Q1 2024. The bank's net interest margin narrowed to 5.02% in Q1 2024, compared to 5.28% in the previous quarter. Brokerages highlight the bank's pace of deposit accretion and its impact on margin as key focus areas. The bank's standalone net profit rose 81% YoY to Rs 6,249 crore in Q1 2024. CEO Ashok Vaswani notes signs of stress in the credit cards segment with delinquencies. The Reserve Bank of India barred Kotak Mahindra Bank from issuing fresh credit cards and onboarding new customers in April. The stock fell as much as 3.6% to Rs 1,759.15 apiece on the NSE.
ICICI Bank's standalone net profit rose 14.6% YoY to Rs 11,059 crore in Q1FY25. Net interest income increased 7.3% YoY to Rs 19,552.9 crore. The bank's gross non-performing asset (NPA) ratio stood at 2.15% and the net NPA ratio at 0.43%. Total advances increased by 15.7% YoY to Rs 12.23 lakh crore, while the domestic loan portfolio grew by 15.9% YoY to Rs 11.88 lakh crore. The retail loan portfolio grew by 17.1% YoY and 2.4% sequentially. Total period-end deposits increased by 15.1% YoY to Rs 14.26 lakh crore, with average deposits increasing by 17.8% YoY to Rs 13.78 lakh crore.
Indian Hotels Co. reported a 10% jump in net profit to Rs 260 crore in the June quarter, beating Bloomberg's estimate of Rs 255 crore. Emkay Global initiated coverage on the stock with an 'add' rating and a target price of Rs 615 apiece. The new business vertical generated Rs 162 crore in revenue, up 37% from the previous year. Emkay Global believes valuations are rich, which limits upside. Nuvama maintains a 'hold' rating on the stock with a target price of Rs 568 apiece. The stock has risen 55.73% in the last 12 months and 39.3% on a year-to-date basis.
Union Bank of India has released its Q1 results, which were in line with expectations. The bank reported strong other income, which offset high provisions. Healthy recoveries and a consistent decline in restructured assets provide a healthy outlook for asset quality.
ICICI Lombard reported Q1 results with net profit in line with expectations. The company maintains its combined ratio guidance. Growth in the motor segment is expected to sustain with the approaching festival season. ICICI Lombard is taking measures to grow the business profitably.
Atul's Q1 earnings increased due to recovery in volumes and cost seasonality. ICICI Securities revises Atul's target price to Rs 6,380. The target price is unchanged at 28 times FY26E earning per share. The brokerage maintains a 'Reduce' rating.
FedFina has released its Q1 results, showing sustained growth momentum and a transitory increase in credit cost. ICICI Securities maintains a 'Buy' rating for FedFina with a target price of Rs 184.
Poonawalla Fincorp's Q1 earnings missed expectations due to NIM compression, but loan growth remained strong. The company's Q1 net profit jumped 45% to Rs 292 crore. Poonawalla Fincorp's AUM grew by 52% to Rs 26,970 crore. The brokerage firm Motilal Oswal believes that Poonawalla is well-positioned for growth and superior risk-adjusted returns, thanks to its strong leadership teams and focus on leveraging technology and analytics.
Punjab National Bank's standalone net profit rose 159% YoY to Rs 3251.5 crore in Q1FY25, beating estimates. Net interest income for the lender rose % YoY to Rs 10,476.3 crore. Other income increased 5.1% YoY to Rs 3,609.5 crore. Gross NPA improved to 4.98% and NNPA improved to 0.60%. Atul Kumar Goel, MD & CEO of PNB, stated that the GNPA guidance for this year will be below 4%. Provisions for the quarter fell 70% YoY to Rs 1,312.3 crore. Total CASA deposits increased to Rs 5.49 lakh, up 3.4% YoY. Retail term deposits grew 9.2% YoY to Rs 5.85 lakh crore. Total retail advances rose 14.4% YoY to Rs 2.34 lakh crore. The bank redeemed Basel III compliant tier II bonds of Rs 500 crore. The bank plans to raise Rs 5,000 crore via QIP in the current quarter.
State Bank of India (SBI) reported a marginal 0.9% YoY increase in its Q1 net profit at ₹17,035.2 crore, whereas its net interest income during the quarter climbed 5.7% YoY to ₹41,125 crore. The net interest income (NII) rose 5.7% YoY to ₹41,125 crore. Gross NPA ratio improved by 55 bps YoY to 2.21%. Net NPA ratio improved by 14 bps YoY to 0.57%. SBI board approved raising ₹25,000 crore via bonds. The net profit surpassed estimates, while NII missed projections. SBI's Q1FY25 net profit stands at ₹17,035 crores, with operating profit growing by 4.55% YoY to ₹26,449 crores. Credit growth is at 15.39% YoY, with domestic advances growing by 15.55% YoY. Whole bank deposits grew at 8.18% YoY, with CASA deposit growing by 2.59% YoY. SBI's CASA ratio stood at 40.7% as of June 30, 2024.
Stocks to watch include HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Indian Hotels, Union Bank of India, ICICI Lombard, Atul, FedFina, Poonawalla Fincorp, Punjab National Bank, and SBI.