HDFC Bank ADRs Rise 2.5% as Mumbai Shares Rebound From
HDFC Bank ADRs Rise 2.5% as Mumbai Shares Rebound From 52-Week Low After CEO Exit

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HDFC Bank ADRs Rise 2.5% as Mumbai Shares Rebound From 52-Week Low After CEO Exit

MUMBAI — HDFC Bank Ltd. American depositary receipts rose 2.47% to $22.38, up 54 cents, as the Mumbai listing bounced from a fresh 52-week low a week after Chief Executive Sashidhar Jagdishan said he will not seek another term.

The NSE stock closed at 708.25 rupees, up 14.45 rupees or 2.08%, after printing a 52-week floor on the same session. Volume was heavy. The ADR quote at 10:05 a.m. Eastern tracked that rebound, not a new earnings print. Next scheduled results are Oct. 19 for the quarter through September.

Jagdishan, 61, told the board on Aug. 29 he will retire when his term ends Oct. 26. Bloomberg later reported that new part-time Chairman Rajiv Kumar had pressed for faster loan growth and executive changes, and that Jagdishan chose to step aside rather than remake the bench. Any successor needs Reserve Bank of India approval. The bank is India's most valuable lender, with a market value that has slid with the stock — down about 28% this calendar year versus a small decline in the Nifty Bank index, Bloomberg calculated, wiping more than $60 billion from last year's peak.

The operating numbers underneath the leadership news are slower growth and thinner margins, not a credit blow-up. For the year ended March 31, net profit rose 10.9% to 746.71 billion rupees. Advances grew 12.1%. Deposits grew 14.4%. Net interest margin was 3.34%. Gross nonperforming assets were 1.15%, down from 1.33%. Return on average net worth was 14.3%. Basic earnings were 48.62 rupees a share.

On the April full-year call Jagdishan said system credit had come in around the 10.5% to 11.5% band the bank had expected and that HDFC did 12%, "up from 5 and 1/2% last year." "Deposit growth rate at 14.4% continues to grow faster than the credit growth, which is what we've always been doing," he said. "The yield on assets had a faster transmission as against deposits on a full year basis leading to a NIM drop."

The June quarter, reported July 18, showed the same squeeze. Standalone profit after tax was 190.6 billion rupees, up 5.0%, or about 9.8% after stripping prior-year gains, one-off provisions and tax credits. Net interest income rose 6.7% to 335.3 billion rupees. NIM was 3.26% on total assets and 3.40% on earning assets. Average deposits were 30.12 trillion rupees, up 13.3% year on year and 5.6% from March. The balance sheet was 43.98 trillion rupees. Credit cost was 0.40%. Jagdishan opened that call by saying, "It's been a very tough period, but I really am proud of them."

Asset quality is not the bear case. Gross NPAs are among the lowest at a large Indian bank. The bear case is multiple compression after the 2023 merger with HDFC Ltd., a loan-to-deposit ratio that still needs deposits to grow faster than loans, and a liquidity coverage ratio that analysts at Prabhudas Lilladher flagged near 114%. About 70% of the book is linked to external benchmarks, so rate cuts hit asset yields before deposit costs ease.

Thursday's 2% bounce does not restore the premium the stock used to carry. Price-to-book on the Indian listing is about 1.8 times. Some domestic houses still have Buy notes with targets of 960 to 1,100 rupees. Those targets assume a successor who can lift loan growth without blowing the deposit franchise Jagdishan spent a career defending.

The ADR at $22.38 is a claim on that franchise after a year of relative underperformance, a CEO countdown and a margin that has not yet found a floor. The 2.5% uptick is a dead-cat bounce until Mumbai names the next managing director and the October quarter shows whether deposits still outrun loans.

MUMBAI — HDFC Bank Ltd. American depositary receipts rose 2.47% to $22.38, up 54 cents, as the Mumbai listing bounced from a fresh 52-week low a week after Chief Executive Sashidhar Jagdishan said he will not seek another term.

The NSE stock closed at 708.25 rupees, up 14.45 rupees or 2.08%, after printing a 52-week floor on the same session. Volume was heavy. The ADR quote at 10:05 a.m. Eastern tracked that rebound, not a new earnings print. Next scheduled results are Oct. 19 for the quarter through September.

Jagdishan, 61, told the board on Aug. 29 he will retire when his term ends Oct. 26. Bloomberg later reported that new part-time Chairman Rajiv Kumar had pressed for faster loan growth and executive changes, and that Jagdishan chose to step aside rather than remake the bench. Any successor needs Reserve Bank of India approval. The bank is India's most valuable lender, with a market value that has slid with the stock — down about 28% this calendar year versus a small decline in the Nifty Bank index, Bloomberg calculated, wiping more than $60 billion from last year's peak.

The operating numbers underneath the leadership news are slower growth and thinner margins, not a credit blow-up. For the year ended March 31, net profit rose 10.9% to 746.71 billion rupees. Advances grew 12.1%. Deposits grew 14.4%. Net interest margin was 3.34%. Gross nonperforming assets were 1.15%, down from 1.33%. Return on average net worth was 14.3%. Basic earnings were 48.62 rupees a share.

On the April full-year call Jagdishan said system credit had come in around the 10.5% to 11.5% band the bank had expected and that HDFC did 12%, "up from 5 and 1/2% last year." "Deposit growth rate at 14.4% continues to grow faster than the credit growth, which is what we've always been doing," he said. "The yield on assets had a faster transmission as against deposits on a full year basis leading to a NIM drop."

The June quarter, reported July 18, showed the same squeeze. Standalone profit after tax was 190.6 billion rupees, up 5.0%, or about 9.8% after stripping prior-year gains, one-off provisions and tax credits. Net interest income rose 6.7% to 335.3 billion rupees. NIM was 3.26% on total assets and 3.40% on earning assets. Average deposits were 30.12 trillion rupees, up 13.3% year on year and 5.6% from March. The balance sheet was 43.98 trillion rupees. Credit cost was 0.40%. Jagdishan opened that call by saying, "It's been a very tough period, but I really am proud of them."

Asset quality is not the bear case. Gross NPAs are among the lowest at a large Indian bank. The bear case is multiple compression after the 2023 merger with HDFC Ltd., a loan-to-deposit ratio that still needs deposits to grow faster than loans, and a liquidity coverage ratio that analysts at Prabhudas Lilladher flagged near 114%. About 70% of the book is linked to external benchmarks, so rate cuts hit asset yields before deposit costs ease.

Thursday's 2% bounce does not restore the premium the stock used to carry. Price-to-book on the Indian listing is about 1.8 times. Some domestic houses still have Buy notes with targets of 960 to 1,100 rupees. Those targets assume a successor who can lift loan growth without blowing the deposit franchise Jagdishan spent a career defending.

The ADR at $22.38 is a claim on that franchise after a year of relative underperformance, a CEO countdown and a margin that has not yet found a floor. The 2.5% uptick is a dead-cat bounce until Mumbai names the next managing director and the October quarter shows whether deposits still outrun loans.