HDFC Bank shares rise by 11% this month, here's why?

India’s largest private bank posted gains of 2.32% on Tuesday and was instrumental in taking the key index NIFTY to a record 23,800 level. HDFC Bank shares traded near the 52-week high levels at ₹1,716.95 on Tuesday before closing at ₹1,711.35. The stock had hit a 52-week high of ₹1,757.50 in July 2023.

However, on Wednesday, the scrip was down 0.4% to ₹1,704.5 due to some profit booking.

The stock has recovered nearly 25% from its 52-week low of ₹1,363.55 per share hit on February 14, 2024.

Strong optimism over the private bank’s performance in coming years has fuelled the rally in its shares.

Experts believe that HDFC Bank is well-positioned to get back its industry-leading profitability in the next four years. They expect HDFC Bank’s return on assets to rise from 1.8% to 2.1% in the next four years on the back of loan mix improvement and cost of funds normalisation.

Experts also believe that operating leverage will start to kick in in the next few years.

HDFC Bank recently increased its fixed deposit interest rates by 20 basis points to attract funds. The bank raised its interest rates on fixed deposits of various tenures to up to 7.25% for general citizens and up to 7.75% for senior citizens.

Before that, the private lender had reduced its Marginal Cost of Funds-Based Lending Rates (MCLR) by 5 basis points for a 2-year tenure. The MCLR for 2-year tenure has been reduced to 9.30% from 9.35% earlier.

The bank posted a 37% jump in standalone profit for the March quarter to ₹16,512 crore compared to the year-ago period. The net interest income rose by 24.5% to ₹29,077 crore in the last quarter of 2023-24 compared to the year-ago period.

The bank’s consolidated net revenue grew by 133.6% to ₹80,700 crore for the quarter ended March 31, 2024, from ₹34,550 crore for the quarter ended March 31, 2023.

HDFC Bank shares were trading 0.15% down at ₹1,708.75 per share on NSE at 12:45 PM.