Mutual funds on a buying spree: Acquire ₹13,850 Crore worth of HDFC Bank shares in January

15 Feb 2024 , 11:12 AM

Following a decline in HDFC Bank stock in January, mutual funds pounced, purchasing shares worth ₹13,850 Crore despite the company’s dismal earnings. After selling about 1.53 Crore shares of the institution in the December quarter, the funds purchased about 8.83 Crore shares of the firm in January.

Mutual funds had around 136.26 Crore HDFC Bank shares as of January 2024, up from 127.44 Crore as of December 2023. Based on Primedatabase data, the value of these shares dropped throughout this period from ₹2.18 lakh Crore to ₹1.99 lakh Crore.

Thirteen of the forty mutual funds with investments in HDFC Bank opted to reduce their positions, while 27 increased their holdings in the bank in January. With the largest purchase of ₹3,933 Crore, ICICI Prudential Mutual Fund topped the buyers. HDFC Mutual Fund and Kotak Mutual Fund came in second and third, respectively, at ₹2,981 Crore and ₹2,625 Crore. 

The largest shareholder in HDFC Bank is SBI Mutual Fund, which had 36.18 Crore shares valued at ₹52,921 Crore as of January. Following with 16.2 Crore and 13.69 Crore shares, valued at ₹23,686 Crore and ₹19,990 Crore, respectively, were HDFC Mutual Fund and ICICI Prudential Mutual Fund. UTI Mutual Fund, Nippon India Mutual Fund, Kotak Mahindra Mutual Fund, and Mirae Asset Mutual Fund are some of the other significant holders.

Despite a net profit that exceeded consensus projections because of one-off items, HDFC Bank shares suffered a setback in January, plunging more than 14% as a result of the company’s December quarter reports that showed dismal deposit and liquidity measures. The bank’s quarter-end net interest margin of 3.4 % was below the projected 3.6 %.

HDFC Bank’s valuation was 2.3 times the one-year ahead book value after a steep decline, which was less than the five-year average of 3.1x. Given that the December quarter saw a 2 % on-year fall in EPS. 

With investments ranging from ₹1,460 to ₹3,139 Crore, the best mutual fund choices, after HDFC Bank, were Reliance Industries, Kotak Mahindra Bank, Maruti Suzuki India, Larsen & Toubro, and State Bank of India. With MFs withdrawing ₹3,377 Crore, ICICI Bank led in sales. Tata Motors, Bharti Airtel, NTPC, and Infosys were all extensively sold.

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