HDFC bank drags down share market; shares plunge 7% as Q3 results disappoint investors

HDFC bank shares saw the biggest fall in over three years on Wednesday as its shares plunged over 7% to Rs 1,560 a piece, losing as much as Rs 82,720.1 crore in market cap. This after the Q3 net interest margin of the bank was lower than analysts' estimates.

In the past one year, the stock of HDFC Bank gained over 5% as against a 25 percent surge in the benchmark Sensex.

Market Performance

The fall in the shares has also dragged down the benchmark indices, Sensex and the Nifty by over 1%. The Nifty Bank fell as much as 3.31%, led by fall in HDFC Bank, Axis Bank and Kotak Mahindra Bank.

Also Read: Sensex crashes 950 Points, Nifty hovers around 21,786 in early trade; HDFC Bank slides 5%

The impact of HDFC shares is signification as it commands over 14% weightage on the Nifty 50 index, which is the highest among the constituents.

"Today, the Sensex and Nifty experienced a significant downturn, driven by a sell-off in banks following HDFC Bank's Q3 results and amidst unfavourable global indicators," Shrey Jain, chief executive officer of SAS Online told NDTV-Profit.

HDFC Bank Q3 Results

Investors were disappointed of the Q3 results extending loss in HDFC Bank's US-listed ADRs. As per Bernstein Research, the bank disappointed both in terms of the loan to deposit ratio and net interest margin change.

The HDFC Bank ADR, the US-listed shares of the bank, tanked 6.7% on the NYSE to $61 in the biggest single-day drop since April 2022.

Core net interest margin for the bank stood at 3.4% as of Dec. 31, and at 3.6% on an interest earning assets basis. Meanwhile, the net profit rose 33% Y-O-Y to Rs 16,372 crore in Q3FY24, which was near expectations. However, it included a one-time tax rate gain. The bank's net interest income grew 24% on-year to Rs 28,470 crore during the quarter, falling below estimates.

The Non-performing assets of the bank also grew by 1.26% in Q3FY24 from 1.23% last fiscal. Its net NPA dropped to 0.31% from 0.33% in this period.