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Ashok Leyland Ltd.

Automobiles-Trucks / Lcv

HDFC Bank

Financial Services

Head Quarters:Mumbai, Maharashtra
Managing Director: Mr. Sashidhar Jagdishan

Company Overview

The Housing Development Finance Corporation Limited or HDFC Ltd was among the first financial institutions in India to receive an “in principle” approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. This was done as part of RBI’s policy for liberalisation of the Indian banking industry in 1994.

HDFC Bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai, India. The bank commenced operations as a Scheduled Commercial Bank in January 1995.

On April 4, 2022 the merger of India’s largest Housing Finance Company, HDFC Limited and the largest private sector bank in India, HDFC Bank was announced. HDFC Ltd, over the last 45 years has developed one of the best product offerings making it a leader in the housing finance business. HDFC Bank enables seamless delivery of home loans as a part of its wide product suite catering to urban, semi urban and rural India.

As of March 31, 2025, the Bank’s distribution network was at 9,455 branches and 21,139 ATMs across 4,150 cities / towns as against 8,738 branches and 20,938 ATMs across 4,065 cities / towns as of March 31, 2024. 51% of our branches are in semi-urban and rural areas. The Bank’s international operations comprises four branches in Hong Kong, Bahrain, Dubai and an IFSC Banking Unit (IBU) in Gujarat International Finance Tech City. It has five  representative offices in Kenya, Abu Dhabi,  Dubai, London and Singapore.  The Singapore and London offices were representative offices of erstwhile HDFC Limited and became representative offices of the Bank post the merger. These  are for providing loans-related services for availing housing loans in India and for the purchase of properties in India

Head Quarters: Mumbai, Maharashtra

Managing Director: Mr. Sashidhar Jagdishan

Financial Highlights

  1. Quarterly Performance:

    Metric Mar-25 Dec-24 Mar-24 Growth (QoQ) Growth (YoY)
    Revenue 1,20,269 1,12,194 1,24,391 7% -3%
    EBITDA 25,573 23,973 17,761 7% 44%
    Profit After Tax 19,285 18,340 18,013 5% 7%

    Insights:

    1. NIMs held steady at 3.4-3.5%, supported by stable funding costs (4.9%) and disciplined deposit pricing, with management prioritizing long-term stability over short-term fluctuations despite potential rate cut pressures.

    2. Deposits grew faster than loans, reducing the CD ratio from 110% to 96%, with a gradual decline to 85-90% targeted by FY27 as the bank focused on retail deposits over higher-cost corporate funding.

    3. Asset quality remained strong, with no stress in unsecured loans (~75-80% salaried borrowers), as the bank maintained conservative underwriting and avoided risky segments despite competition.

    4. ROA sustained at 1.8-1.9%, supported by reinvestment and efficiency gains, though potential 10 bps fluctuations may occur due to macro conditions.

  2. Segment Wise Revenue

  3. Geography Revenue

Key Ratios

Ratio Q4 FY25 Industry Benchmark Remarks
EPS 92.5 75-100 ✅ In range – Strong earnings per share, consistent with peer performance.
P/E Ratio 21.3 16-22 ✅ Fairly valued – Slightly near the upper end, but within normal bounds.
Return on Assets (RoA) 1.74% 1.8-2.2% ⚠️ Just below – Marginally under benchmark; needs better asset utilization.
Return on Equity (RoE) 14.5% 13-17% ✅ Healthy – Indicates good return to shareholders within industry range.
D/E Ratio 6.46 5-7 ✅ Balanced – Debt-to-equity is within the expected range.
NIM (%) 3.46% 3.5-4.5% ⚠️ Slightly low – Net interest margin is just under benchmark, monitor closely.

Management Updates

  • RBI has commenced rate cuts with a shift to an accommodative stance, aiming to support GDP growth amid moderated inflation.
  • Global macroeconomic uncertainty persists due to trade tariffs, potentially impacting inflation and growth across economies.
  • Corporates are adopting a wait-and-watch approach, delaying decisions until clearer global trade dynamics emerge.
  • Industry-wide deposit rate cuts (30–45 bps) reflect policy transmission, but liquidity improvements are needed to sustain healthy deposit growth.
  • Credit cycles may be bottoming out, with potential normalization of NPAs and credit costs over the next 1–3 years, though at historically lower levels.

Management Guidance

Key Focus Area Guidance/Target (FY26) Current Status (Q3 FY25) Timeline
Credit Deposit Ratio ≤90% 1.3% YoY FY27
Return on Assets (RoA) 1.9%–2.0% 1.9% Ongoing
Net Interest Margin 3.4%-3.5% 3.46% Ongoing
Advances Growth (YoY) 10-12% 7.7% FY26
Priority Sector Lending >40% 39% Ongoing
GNPA <1.4% 1.33% Ongoing

Guidance Tracker

Guidance Parameter Guidance (FY25) Q4 FY25 Actual Status
Credit Deposit Ratio ≤ 90% 96% ❌ Not Achieved
ROA ≥ 1.8% 1.9% ✅ Achieved
Net Interest Margin 3.4%-3.5% 3.46% ✅ On Track
Cost To Income Ratio < 40% 39.8% ❌ Missed
GNPA < 1.4% 1.33% ✅ Achieved
Capital Adequacy Ratio > 18% 19.6% ✅ Achieved

Shareholding Pattern

Category Mar 24 Dec 24 Mar 25 YoY Change QoQ Change
Promoters 0.00% 0.00% 0.00% - -
FIIs 47.83% 49.21% 48.30% +0.47% -0.91%
DIIs 33.33% 34.37% 35.68% +2.35% +1.31%
Government 0.18% 0.18% 0.18% - -
Public 18.64% 16.23% 15.84% -2.80% -0.39%

Red Flags

Red Flag Parameter Status Severity
Management Changes No Changes Low
Auditor Exit No Changes Low
Credit Rating No Changes Low
Share Holding Pattern No Major Changes Low
Liquidity Adequate Low

Conclusion

HDFC Bank demonstrates robust performance with stable NIMs (3.4-3.5%) and strong deposit growth (15.8% YoY), supported by strategic balance sheet management and cost efficiency. The bank is well-positioned to navigate the rate-cut cycle, leveraging its leadership in retail deposits and technology investments. However, challenges include maintaining CASA ratio stability amid shifting customer preferences and competitive pressures in corporate lending. Execution on liability optimization and productivity gains will be key to sustaining ROA (1.8-2.1%) and market share growth.

Key Positives:

  • Stable NIMs (3.46% in Q4) and cost of funds (4.9%)
  • Deposit growth outperformance (INR 3.4 trillion YoY)
  • Prudent asset quality with controlled NPAs
  • Strong capital adequacy (CRAR) position

Key Negatives:

  • CASA ratio pressure due to higher time deposit preference
  • Competitive intensity in corporate/SME lending yields
  • Potential margin compression from rapid rate cuts
  • Need for continued opex management amid branch expansion
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