Laughing all the way to the bank

As HDFC Bank’s stock price continues to rise, director Paresh Sukthankar offloads shares worth ₹9.86 crore

While some leading private and public sector banks continue to tread on a fiery path, HDFC Bank remains an exception. On April 21, HDFC Bank reported a record profit for March quarter with a 20% year-on-year growth while its asset quality also remained stable. Taking note of the bank’s positive results, investors are as buoyant about its prospects as ever. The stock price has risen from Rs.1,854 on January 1 to Rs.2,065 on May 15 which was a new high for the lender.

Riding the high, HDFC Bank deputy managing director Paresh Sukthankar offloaded 16 lakh shares worth Rs 9.86 crore on May 7 and 9. Similarly, Kaizad Bharucha, executive director, also sold shares worth Rs.1.90 crore on May 9 and 10. Apart from Sukthankar and Bharucha, other senior executives Bhavesh Zaveri, Maria Soares, Atul Barve, and Madhusoodan Hegde also booked profits in first two weeks of May, selling shares worth Rs.1.90 crore, Rs.2.24 crore, Rs.1.29 crore and Rs.2.34 crore respectively.

In FY18, the bank’s net interest income rose 17.70% (YoY) to Rs.10,657 crore from Rs.9,055 crore in FY17. The total advances of the bank stood at Rs.6.58 lakh crore growing 18.7% year-on-year. As of March 31, 2018, the bank’s ratio of gross non-performing assets to total advances was 1.30% as compared to 1.05% a year earlier. The net NPAs of the bank are at 1.0% of net advances as on March 31, 2018.

With the bank recording a stellar performance, analysts are bullish. Edelweiss Securities deemed it best-in-class liability franchise and stated that HDFC Bank’s expansion in rural and semi-urban parts of the country would ensure that it delivers above-industry earnings growth. Benefiting from the expansion, the bank’s loan growth has also exceeded the expectations growing 23% year-on-year. Even Motilal Oswal Securities has predicted that HDFC Bank is well positioned to outgrow the system and further gain market share. They expect HDFC Bank to attain 10% market share by FY22 while systemic loan growth also revives modestly.

The analysts’ positive attitude and positive earnings report have reflected in the stock market. While ICICI Bank and Axis Bank have shed 1.29% and 1.80% respectively since start of the year, HDFC Bank has gained 11%. The appetite for the stock is also high among mutual funds. According to Ace Equity, 64 equity mutual fund schemes out of 145 had HDFC Bank as the top holding in their portfolio. The mutual funds’ holding in the stock has gone up from 9.87% in March 2017 to 12.08% in March 2018. The promoters and FIIs have pared their holdings marginally in the same period.