HDFC Bank share: Is this a stock to buy today after Q3 business update?

HDFC Bank share price fell on Monday after the country’s largest private sector lender's December quarter business update showed a moderate increase in gross advances and a strong growth in deposits. 

HDFC Bank’s gross advances in the third quarter of FY25 increased by 3% year-on-year (YoY) to ₹2,54,250 crore. On a sequential basis, the gross advances grew 0.9%.

The bank’s total deposits in Q3FY25 rose by 2.5% quarter-on-quarter (QoQ) and 15.8% YoY to ₹2,56,350 crore, HDFC Bank said in a regulatory filing.

CASA deposits (current and savings accounts) declined by 1.2% QoQ and 4.4% YoY to ₹87,250 crore. The CASA ratio in the December quarter decreased to 34.04% from 35.34% in the September quarter and from 37.74% in the same period last year.

HDFC Bank’s average advances under management (advances grossing up for inter-bank participation certificates, bills rediscounted and securitisation/assignment) were ₹26,27,600 crore for the December 2024 quarter, a growth of around 7.6% YoY and around 2.5% QoQ.

“HDFC Bank’s Q3 business update reflects mixed trends. However, the Credit-Deposit Ratio slipped below the critical 100% threshold, declining to 99.18% from 111.53% a year ago, signalling slower credit demand than the deposit inflow. CASA deposits, a key indicator of low-cost funding, witnessed a sequential decline, which could impact net interest margins in the near term,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

While deposit growth remains positive, the subdued loan growth and declining CASA raise questions about the bank’s growth momentum amid tightening liquidity and a challenging macroeconomic environment. A focused strategy will be critical to sustaining profitability and navigating headwinds, Jain added.

Investment in Other Banks

In a separate regulatory filing on Friday, HDFC Bank said that it received approval from the Reserve Bank of India (RBI) to acquire a stake of up to 9.5% in Kotak Mahindra Bank, AU Small Finance Bank and Capital Small Finance Bank within a year from the approval date.

Should you buy HDFC Bank shares?

Mahesh M Ojha, AVP — Research at Hensex Securities, recommends a ‘buy on dip’ strategy for HDFC Bank stock.

“A ‘buy on dip’ strategy can be good in HDFC Bank stock after the Q3 business update. Traders can buy HDFC Bank shares around ₹1,710 - 1,720 levels, with a stop loss at ₹1,668, and medium-term target price of ₹1,850 - 1,900,” Ojha said.

At 9:20 am, HDFC Bank shares were trading 0.49% lower at ₹1,740.70 apiece on the BSE.

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