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HDFC Bank to report Q2 earnings tomorrow: Here's what brokerages expect


As per the brokerages, HDFC Bank will post a net profit of below 20 percent YoY for the third consecutive quarter.

HDFC Bank to report Q2 earnings tomorrow: Here's what brokerages expect
Private lender HDFC Bank will report its September quarter results on Saturday (October 17) kickstarting the earnings for large-cap private-sector lenders.
In the June quarter, the bank reported a 22 percent increase in consolidated net profit at Rs 6,927.24 crore as against Rs 5,676.06 crore in the year-ago period. The bank's provisions, meanwhile, for bad loans and contingencies during April-June 2020-21 were raised to Rs 3,891.52 crore as against Rs 2,613.66 crore in the year-ago same period.
However, in the September quarter, the lender is expected to report a much lower profit due to the pandemic. As per the brokerages, it will post a net profit of below 20 percent YoY for the third consecutive quarter.
Here's what brokerage houses expect from the Q2FY21 numbers of the lender tomorrow
Emkay Global Financial Services
The brokerage believes the lender's net profit will rise around 15 percent YoY to Rs 7,314.7 crore due to additional COVID-19 led provisions. However, the brokerage added that credit growth will remain strong on the back of a healthy pick-up in the retail book and continued strong working capital demand
Advance growth, despite moderation QoQ from 21 percent to 16 percent YoY (largely due to corporate advance growth on a high base effect), still outperforms industry vindicating market share gain stance, it added.
It further stated that slippages could be higher on a QoQ basis as the bank may recognize some pain upfront in the non-moratorium book for Q2.
ICICI Securities
The brokerage expects net profit to rise just 3 percent YoY to Rs 6,536.4 crore from Rs 6,345 crore in Q2FY20. However, on a QoQ basis, it may decline 2 percent from Rs 6,658.6 crore clocked in Q1FY21, it added.
Total revenue growth for the lender is seen rising 6 percent (YoY) to Rs 20,195.9 crore, and 2 percent QoQ. Operating profit, meanwhile, is expected to remain nearly flat. It believes the credit cost for the lender will remain stable.
Prabhudas Lilladher
The brokerage estimates a 19.6 percent rise in net profit for the lender at Rs 7,587.3 crore supported by NII and lower provisions in Q2. It expects provisions to rise 20.3 percent in the quarter under review. The gross non-performing asset (GNPA) ratio is seen at 1.4 percent, a bit up from 1.36 percent in Q2FY20.
IDBI Capital
The brokerage sees the net profit at Rs 6,151 crore in the September quarter, a 3.1 percent fall on a YoY basis, and a 7.6 percent decline (QoQ). However, it expects the lender to post strong NII, up 16 percent YoY at Rs 9,343 crore. Outlook on restructuring and commentary from the new managing director will be in focus.
Motilal Oswal
The brokerage expects net profit to rise 19 percent YoY to Rs 7,550 crore. It added that deposit growth looks strong, while loan growth is also healthy. Margins are likely to decline QoQ by 10 bps to 4.2 percent.
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