Sharing some ideas for making Moneycontrol Pro profit, the featured title is HDFC Bank.
HDFC Bank posted a strong performance in the second quarter of FY22. Profit growth was healthy for the quarter despite higher operating expenses. In summary, accelerated provisioning and stable margins sum up its performance in Q2.
A strong recovery in business demand underscored the bank’s performance in the second quarter of FY22. Festive demand is expected to drive business growth over the coming months, especially in the retail segment.
While the bank’s restructured portfolio rose to 1.5% in September, down from 0.8% in the previous quarter. The overall quality of the bank’s assets remains under control and superior to the peer group.
Slippages moderated, collections improved and gross NPA declined during the quarter.
The most comforting factor on the asset quality front is excess funding. The cumulative additional provisions amounted to 0.8% of the advance portfolio at the end of September.
The negative impact on margins due to the increase in business loans in recent quarters as well as RBI’s restriction on credit card business weighed on stock performance.
In terms of valuation, the stock is currently trading at 3.2 times its estimated basic book value for FY 23, which is a discount from its long-term average historical multiple. With growth prospects exceeding short-term margins concerns and a slight increase in the restructured portfolio, the stock’s underperformance is likely to reverse.
Watch the accompanying video for more details.
(Edited by : Dipikka Gosh)