shares fell 1.91 per cent to ₹125.60 on Tuesday afternoon, despite reporting a 13.1 per cent year-on-year jump in net profit to ₹5,100 crore for the December quarter. The stock, which hit a 52-week high of ₹135.15 just a day earlier, faced selling pressure as brokerages flagged concerns over shrinking margins and transition costs for new accounting norms.
The, driven by higher treasury gains of ₹9.1 billion from a stake sale in Canara HSBC Life and strong recoveries from written-off accounts. However, the core performance disappointed with net interest margin contracting 8 basis points quarter-on-quarter to 2.52 per cent, prompting management to slash full-year NIM guidance to 2.6 per cent from 2.8-2.9 per cent earlier.
Brokerages delivered mixed verdicts. While Jefferies maintained a ‘Buy’ rating with a ₹150 target price, citing manageable loan-to-deposit ratios and stable asset quality, Citi issued a ‘Sell’ call with a ₹115 target, expressing concern over margin pressure. CLSA and JM Financial remained cautious, noting that the bank faces an Expected Credit Loss (ECL) transition impact of ₹100 billion, against existing floating provisions of only ₹17.8 billion.
Asset quality showed improvement with gross NPAs declining to 3.19 per cent from 4.09 per cent year-on-year, while the provision coverage ratio strengthened to 96.99 per cent. Trading activity remained heavy with 25.5 million shares changing hands by midday.