HDFC Bank's foreign shareholding dipped to 59.14% in Q3, according to a report released by Brian Freitas of Periscope Analytics on Monday. This drop has resulted in a foreign room of 20.08%, indicating the available space for further foreign investment in the bank.
Domestic investments have seen an upward trend, even with the Securities and Exchange Board of India's (SEBI) 10% Assets Under Management (AUM) limit. Mutual funds, Life Insurance Corporation of India, retail and High Networth Individual (HNI (NYSE:HNI)) investors, and non-resident Indians have all increased their stakes in the bank since its merger with HDFC Ltd.
In September, HDFC Bank held a Nifty 50 weightage of 13.3%. A 7.1% drop in the bank's shares was observed, attributed to fears of lower net interest margins and higher non-performing assets. This caused the bank to underperform compared to its peers. According to InvestingPro, HDFC Bank has a 1 Year Price Total Return of 304.94% and a YTD Price Total Return of 154.03%, indicating a strong long-term performance despite recent setbacks.
Passive index trackers are predicted to acquire more shares in the bank. A global index provider is planning to increase HDFC Bank's weight in its indices, which could lead to an increase in buying activity.
Emkay Global Financial Services has made incremental net worth adjustments for HDFC Bank, indicating changes in the bank's overall financial health. Meanwhile, Prabhudas Lilladher maintains a buy rating for the bank with a target price of ₹2,100. InvestingPro data shows that HDFC Bank's P/E Ratio is 2.83, and its adjusted P/E Ratio for LTM2023.Q2 is 2.93, suggesting the bank's shares are priced relatively low compared to its earnings.
Freitas does not anticipate that the foreign room will exceed 25% in the near future. This prediction suggests that despite the recent decrease in foreign shareholding, there is still considerable room for domestic investors to increase their stakes in HDFC Bank. This aligns with InvestingPro Tips, which indicates that HDFC Bank has been a prominent player in the Banks industry, with stockholders receiving high returns on book equity.
For more insights like these, investors can access additional tips on InvestingPro, which currently lists 12 relevant tips for HDFC Bank, including information on revenue growth, earnings per share, and dividend trends.
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