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What is the story about?
Shares of HDFC Bank Ltd. extended their losing streak for a third consecutive session on Wednesday, January 7, remaining among the top three losers on the Nifty Bank index, after a large block deal took place during the session.
Around 1.84 crore shares of HDFC Bank, representing about 0.10% of the bank’s equity, changed hands in the block deal, with the transaction valued at roughly ₹1,756 crore.
The shares were traded at an average price of ₹950 apiece. Buyers and sellers in the transaction are not yet known.
Overall activity in the stock remained heavy, with shares worth more than ₹3,750 crore changing hands so far in the session. Over 85% of this volume has been marked for delivery.
The recent decline in HDFC Bank shares is largely being driven by investor concerns around the bank's loan to deposit ratio following its December quarter business update.
With the latest numbers, the LDR has increased by around 50 basis points quarter on quarter to nearly 99%, even as loan growth returned to double digits for the first time since the 2023 merger.
The elevated LDR has raised concerns that the bank's ability to accelerate loan growth remains constrained unless deposit mobilisation improves materially. This has kept investors cautious, especially when compared with peers that currently have more comfortable deposit positions.
While management has reiterated its intention to bring the LDR down to below 90% in the near term, the market appears to be factoring in that balance sheet normalisation after the HDFC Ltd merger will take time.
Until deposit growth picks up meaningfully, concerns around growth visibility and margin trajectory are likely to persist.
HDFC Bank shares were trading nearly 2% lower on Wednesday at ₹946.65. The stock has fallen 5.5% over the last three sessions. It ended 2.41% lower on Monday, and declined 1.6% on Tuesday.
Around 1.84 crore shares of HDFC Bank, representing about 0.10% of the bank’s equity, changed hands in the block deal, with the transaction valued at roughly ₹1,756 crore.
The shares were traded at an average price of ₹950 apiece. Buyers and sellers in the transaction are not yet known.
Overall activity in the stock remained heavy, with shares worth more than ₹3,750 crore changing hands so far in the session. Over 85% of this volume has been marked for delivery.
Why is HDFC Bank on a losing streak?
The recent decline in HDFC Bank shares is largely being driven by investor concerns around the bank's loan to deposit ratio following its December quarter business update.
With the latest numbers, the LDR has increased by around 50 basis points quarter on quarter to nearly 99%, even as loan growth returned to double digits for the first time since the 2023 merger.
The elevated LDR has raised concerns that the bank's ability to accelerate loan growth remains constrained unless deposit mobilisation improves materially. This has kept investors cautious, especially when compared with peers that currently have more comfortable deposit positions.
While management has reiterated its intention to bring the LDR down to below 90% in the near term, the market appears to be factoring in that balance sheet normalisation after the HDFC Ltd merger will take time.
Until deposit growth picks up meaningfully, concerns around growth visibility and margin trajectory are likely to persist.
HDFC Bank shares were trading nearly 2% lower on Wednesday at ₹946.65. The stock has fallen 5.5% over the last three sessions. It ended 2.41% lower on Monday, and declined 1.6% on Tuesday.
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