HDFC Bank rises 14% on merger with HDFC and better March quarter numbers

The bank’s CASA ratio stood at around 48% as of March 31, 2022, as compared to 46.1% a year ago and 47.1% a quarter ago

HDFC Bank share price rose 14 percent intraday on April 4 on announcement of a merger with Housing Development Finance Corporation (HDFC) and better numbers for the quarter and year ended March.

HDFC has approved a scheme for amalgamation of wholly-owned subsidiaries HDFC Investments and HDFC Holdings into HDFC and merger of HDFC with HDFC Bank.

The scheme is subject to requisite approvals, said HDFC. The share exchange ratio for the amalgamation of HDFC with HDFC Bank shall be 42 shares (credited as fully paid up) of HDFC Bank for every 25 fully paid up equity shares of HDFC, it added.

The bank’s CASA (current account and saving account) deposits aggregated to approximately Rs 7,51,000 crore as of March 31, 2022, a growth of around 22% from a year ago and 10.2% from a quarter ago.

The CASA ratio stood at around 48% as of March 31, 2022, as compared to 46.1% a year ago and 47.1% a quarter ago, the bank added.

Check out what brokerages have to say: Morgan Stanley Research firm has kept overweight call on HDFC Bank with a target at Rs 1,800 per share. The initial update points to very strong growth in loans and retail deposits and we see continued market share gains, said Morgan Stanley. Loan growth was strong in retail and commercial segment, while big surprise was seen in corporate banking relative to our estimates, it added.

Citi The brokerage house has maintained a buy rating on HDFC Bank with a target at Rs 2,000 per share. The bank has reported loan growth of 21% year on year and retail deposit growth is healthy.

Motilal Oswal HDFC Bank reported robust loan growth, led by a healthy revival in retail loans. The commercial banking and corporate segment too saw strong traction, which will likely support growth in PPOP (pre-provision operating profit). We expect the margin trajectory to recover gradually over FY23, while the uptick in retail loan growth and unsecured products will be supportive of fee income. Trend in retail deposit too remains healthy, with the bank witnessing a sequential improvement in its CASA ratio to 48%.

At 12:55 hrs HDFC Bank was quoting at Rs 1,626.65, up Rs 120.35, or 7.99 percent and Housing Development Finance Corporation was quoting at Rs 2,626.75, up Rs 175.80, or 7.17 percent on the BSE. We maintain our buy rating with a target price of Rs 2,000 per share (premised on 3.4x FY24E ABV for the core bank and Rs 127 from its subsidiaries).