HDFC Bank shares hit a record high, rally 34% from 52-week low; here’s why

Shares of India’s leading private sector bank hit record high levels ahead of Q4FY25 results, which are scheduled to be announced on Sunday, April 20. The shares hit a record high level of ₹1,912 apiece on the NSE on Thursday. Shares have rallied more than 34% from the 52-week lows hit in June 2024, outperforming the benchmark Bank NIFTY, which gained 17% in a similar period.

Safe bet amid a volatile environment

Attractive valuations

Despite a 34% rally from the 52-week low levels, the bank’s valuations still trade below their 5-year median levels. HDFC Bank currently trades at a price-to-book value of 2.9x, much lower than its five-year median price-to-book value of 3.2x.

Consistent performer

HDFC Bank's financial performance has seen a consistent rise as the bank continued to grow at a compounded annual growth rate (CAGR) of 26% over three years at the net profit level. Whereas its share price has grown at 10% CAGR in a similar period. The underperformance was largely due to concerns over margins and its loan-deposit ratio. The low deposit mobilisation dented the margins. However, experts believe the deposit mobilisation issue has bottomed out and banks could be in a better position to expand margins.

Favourable sectoral headwinds

The overall credit growth for the banking sector came down to single digits in early FY25 at 8% as high rates and inflation dented the credit demand. In the current scenario, where inflation is under control and more rate cuts on the card, banking sector is expected to see high double digit growth in credit offtake in coming quarters.

Apart from the above probable reasons, optimism around Q4FY25 results has also generated investors’ attention towards the stock price. HDFC Bank will announce its Q4FY25 results on April 19, Saturday along with its peers like ICICI Bank and Yes Bank.