HDFC Bank Set for Opening Surge as LIC Gets RBI Nod to Increase Stake Amid Q3 Results Impact

29 Jan 2024 , 01:10 PM

HDFC Bank stock is expected to see an opening surge on January 29 after the Reserve Bank of India (RBI) granted LIC permission to increase its stake in the bank by 4.8%, reaching a total of 9.99%.

The stock faced a 14% decline after the bank reported its Q3 results, impacted by margin strain, a decrease in earnings per share (EPS), and slower-than-expected deposit growth.

LIC has been authorized by the RBI to acquire the additional shareholding by January 24, 2025, while ensuring that the aggregate holding does not exceed 9.99% of the bank’s paid-up share capital or voting rights.

During Q3, HDFC Bank recorded a 4% growth in net interest income (NII) driven by a 4.9% sequential increase in gross advances. The net profit also saw a 2.5% quarter-on-quarter rise, supported by substantial treasury gains and advantageous tax write-backs amounting to Rs 1,500 crore.

Despite a significant increase in the cost of funds, HDFC Bank experienced a restrained expansion in net interest margins (NIMs) during Q3FY24, maintaining a sequential flat rate of 3.6%.

The bank’s management believes it is at the lower end of the margin contraction spectrum and anticipates a recovery to 3.7% in 18-24 months.

For feedback and suggestions, write to us at [e-mail]