HDFC Bank shares are underperforming despite CEO clarity, Q2 update - IIFL's Rikin Shah explains why - CNBC TV18
Reported by CNBC-TV18 Markets, not nibnow. We are not the publisher of this story, only the source is.
The bank’s strong loan and deposit growth hasn’t translated into stock gains, signaling a possible disconnect between operational performance and market valuation that investors should consider.
HDFC Bank recently disclosed that its loan portfolio expanded by 16.3% during the September quarter. Simultaneously, the institution saw its deposit base grow at a faster pace, reaching an 18.8% year-on-year increase. Despite these positive operational metrics and clear communication from leadership, the bank's equity shares have failed to deliver strong returns. Rikin Shah from IIFL attributes this underperformance to the bank's limited collection of FCNR (B) deposits. He notes that the volume of these specific foreign currency liabilities remains low relative to the bank's overall balance sheet size, which has weighed on investor sentiment and restricted the stock's upward movement in the market.
FCNR (B) deposits are foreign currency non‑resident deposits that banks use to attract overseas funds; the level of such deposits can affect a bank’s liquidity and earnings, and analysts often watch them as a gauge of foreign investor confidence.
- •Monitor whether HDFC Bank increases its FCNR (B) deposit mobilization in upcoming quarters
- •Watch for any guidance or commentary from the bank on addressing the stock’s underperformance
- •Track the bank’s share price reaction to future earnings releases or regulatory updates