Shares of India’s major private sector lender HDFC Bank slumped in trade on Wednesday afternoon, after reports of PE giant KKR offloading stake in the firm.
Shares of India’s major private sector lender HDFC Bank slumped in trade on Wednesday afternoon, after reports of PE giant KKR offloading stake in the firm. HDFC Bank shares closed 2% lower at Rs 2,242.70 on BSE. Shares of HDFC Bank fell after media reports said that KKR & Co will be offloading a 0.42% stake in the private lender. PE giant KKR & Co will offload around 1.14 crore shares, or 0.42 per cent stake in HDFC Bank through a bulk deal on April 10, the Economic Times reported citing bankers as saying. Further, the offer price would be up to 3% discount to Tuesday’s closing price of Rs 2,287.25, the report added.
According to a report by Motilal Oswal HDFC Bank is set to report a net profit of Rs 5,803.3 crore in the latest quarter, implying a 20.9% on-year jump. “With structural drivers in place – (a) best-in-class liability franchise, (b) opportunities for market share gains, (c) improving operating efficiency led by digitalization initiatives and (d) expected traction in income due to strong expansion in branch network – we expect HDFC Bank to record strong loan growth and profitability,” Motilal Oswal said in the report.
Retail growth has been led by contribution from the high-RoE products like personal loans and credit cards, notes the report. Over the last 12 years, HDFC Bank’s market share has increased significantly in (a) retail loans, (b) low-cost deposits and (c) profitability, indicating the strength of its franchisee, added the report.
“Margin expansion, a robust fee income profile and strong control on operating leverage are likely to continue driving a steady improvement in the return ratios, in our view. We believe that strong capitalization and liquidity levels should enable HDFC Bank to sustain growth momentum over the next few years,” the research firm noted.