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earnings | IST

Moneycontrol Pro: HDFC Bank in focus, here’s why

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Sharing a few ideas for profit from Moneycontrol Pro, the stock in focus is HDFC Bank. HDFC Bank posted strong performance in the second quarter of FY22. In a nutshell, accelerated provisioning and stable margins summed up its Q2 performance. A strong pick-up in business demand underlined the bank's performance in Q2 FY22.

Sharing a few ideas for profit from Moneycontrol Pro, the stock in focus is HDFC Bank.
HDFC Bank posted strong performance in the second quarter of FY22. Profit growth was healthy for the quarter despite higher operating expenses. In a nutshell, accelerated provisioning and stable margins summed up its Q2 performance.
A strong pick-up in business demand underlined the bank's performance in Q2 FY22. The festive demand is likely to drive further business growth in coming months, especially in the retail segment.
While the restructured book of the bank increased to 1.5 percent as of September, from 0.8 percent during the previous quarter. The overall asset quality of the bank remains under check and superior as compared to the peer group.
Slippages moderated, collections improved and gross NPA declined during the quarter.
The most comforting factor on asset quality front is excess provisioning. Cumulative additional provisions stood at 0.8 percent of the advances book as of September-end.
The adverse impact on margins due to higher corporate lending in the past many quarters along with RBI’s restriction on the credit card business has weighed on the stock performance.
In terms of valuation, the stock is currently trading at 3.2 times its estimated core book value for FY23, which is at a discount to its historical long-term average multiple. With growth outlook outweighing the near term concerns on margins and uptick in the restructured book, the underperformance of the stock is likely to reverse.
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