HDFC Bank (HDB) Shares Drop 0.61% in 6-Day Slide as Missed NIM, Macroeconomic Pressures Weigh

HDFC Bank (HDB) shares fell 0.61% on Thursday, marking their sixth consecutive day of declines, with the stock dropping 4.78% over the past six sessions. The price hit an intraday low of 1,485.30 rupees, the lowest since April 2020, amid persistent investor caution. The recent underperformance follows a broader selloff driven by weak quarterly results and macroeconomic uncertainties.

Key concerns stem from the bank’s missed net interest margin (NIM) target, which fell to 3.4% in Q3 2024, below expectations. A 4% quarterly growth in net interest income—well below the projected 8%—highlighted challenges in leveraging its large deposit base. Deposit growth slowed to ₹41,000 crore during the period, raising questions about the bank’s ability to maintain its historical customer acquisition momentum.

Provision costs surged 50% quarter-on-quarter to ₹4,216.6 crore, driven by higher contingent provisions and a slight rise in non-performing assets. While gross NPAs improved to 1.26%, the spike in provisions signaled growing credit risk exposure. The capital adequacy ratio also declined to 18.39% from 19.54% in the prior quarter, indicating reduced risk buffers despite remaining above regulatory thresholds.

Broader market dynamics exacerbated the sell-off. Rising U.S. tariffs on Indian goods and tightening liquidity conditions in India pressured financial stocks. HDFC Bank’s significant weight in key indices like Nifty and Sensex made it particularly vulnerable to sector-wide declines. Analysts noted that macroeconomic headwinds, including regulatory tightening and subdued credit demand, could prolong the bank’s near-term struggles.

Despite these challenges, some observers remain cautiously optimistic about HDFC Bank’s long-term prospects. Strategic initiatives, such as the potential listing of its subsidiary HDB Financial, could unlock value. However, immediate focus remains on stabilizing deposit growth, managing credit risk, and optimizing operational efficiency to restore investor confidence in the coming quarters.