Why HDFC Bank’s Share Price Dips Today

Introduction:

Shares of Hdfc Bank (NS:HDBK) plummeted on Monday following a downgrade from a major international brokerage.

What Occurred

CLSA, a global brokerage firm, recently lowered HDFC Bank’s stock rating from “buy” to “outperform” and adjusted its target price to ₹1,650 per share, down from ₹2,050.

This decision came amidst concerns raised by analysts regarding the bank’s slow deposit growth and margin recovery.

Despite its position as India’s largest private sector lender, HDFC Bank has seen its stock value drop by over 15% since the start of the year, in stark contrast to the marginal 0.9% decline in the Bank Nifty index.

CLSA analysts pointed out two main challenges for HDFC Bank in the area of deposits, highlighting a high ask rate and a difficult environment.

They anticipate a slower recovery in net interest margin (NIM), projecting a gradual “U-shaped” trajectory rather than a rapid “V-shaped” rebound.

Contrary Views

Conversely, HSBC analysts expressed confidence in HDFC Bank’s growth prospects, issuing a “buy” recommendation with a target price of ₹1,750 per share. They anticipate the stock offering returns between 15-29% compounded annual growth rate over FY24-27.

Moreover, Citi analysts maintained a positive outlook on HDFC Bank, giving it a “buy” rating and a target price of ₹2,050 per share. They emphasized the bank’s strong and sustainable franchise, which is expected to drive profitable growth in the future.

Market Response

During the morning trading session on Monday, HDFC Bank’s share price fell by 0.9% to ₹1,433.05.

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