HDFC Financial institution vs ICICI Financial institution: Which personal sector lender to decide on in long run?

HDFC Financial institution vs ICICI Financial institution: The personal banking sector in India is dominated by two stalwarts, HDFC Financial institution and ICICI Financial institution, providing traders a mix of stability and development potential. Each banks have delivered sturdy performances, backed by sturdy fundamentals and stable monetary metrics. Nonetheless, with differing methods and market positions, selecting between the 2 for long-term funding is usually a difficult choice.

For traders seeking to make a long-term funding choice, weighing the strengths and alternatives of those two banks turns into important. Analysts throughout main brokerages share their views on which financial institution holds the sting within the present market state of affairs.

Inventory Value Development

ICICI has outperformed HDFC Financial institution in 2024 up to now. ICICI has climbed over 33 p.c on a year-to-date (YTD) foundation, whereas HDFC Financial institution has gained round 9 p.c throughout the identical interval. Compared, Nifty Financial institution index, which rose over 10 p.c on this interval.

Nonetheless, within the final one HDFC Financial institution beating its rival including 10 p.c versus a 6 p.c achieve in ICICI.

ICICI has delivered optimistic returns in eleven of the 12 months this yr, whereas HDFC Financial institution has gained in 9. Simply in December, ICICI rose over 2 p.c, extending features for seventh straight month since June. In the meantime, HDFC Financial institution superior 3.5 p.c in December, rising for the fifth straight month since August.

Over the previous yr as properly, each financial institution shares delivered optimistic returns, with ICICI rising 31 p.c and HDFC Financial institution 14 p.c. Each shares outperformed Nifty Financial institution, which superior 13 p.c on this interval.

Boosted by sturdy market sentiment and investor confidence, ICICI reached an all-time excessive of ₹1,361.35 in September 2024. Presently, buying and selling at ₹1,328.95, the inventory is just a bit over 2 p.c under its peak. Nonetheless, it has surged over 37 per cent from its 52-week low of ₹970.05, recorded in January 2024.

In the meantime, HDFC Financial institution additionally hit a file excessive of ₹1,880.00 in September. The personal financial institution now trades at ₹1,858.95, simply 1 p.c away from its peak. That stated, the inventory has skilled an over 36 p.c rise from its 52-week low of ₹1,363.45, hit in February 2024.

During the last three years, ICICI has delivered higher returns, surging over 76 p.c as in opposition to a 23 p.c rise seen in HDFC Financial institution.

HDFC Financial institution vs ICICI Financial institution: A Comparative Have a look at Q2FY25 Earnings

HDFC Financial institution reported a 5.3 p.c year-on-year (YoY) enhance in standalone internet revenue to ₹16,821 crore in Q2FY25, in comparison with ₹15,976 crore in the identical interval final yr. Internet Curiosity Revenue (NII)—the distinction between curiosity earned and curiosity paid—grew 10 p.c to ₹30,110 crore from ₹27,390 crore within the year-ago quarter. This marks the primary comparable year-on-year efficiency for the reason that merger with its mum or dad, Housing Growth Finance Company (HDFC), was finalized in July 2023. HDFC Financial institution’s core Internet Curiosity Margin (NIM) stood at 3.46 p.c on whole property and three.65 p.c on interest-earning property for the September quarter, barely decrease than the three.47 p.c and three.66 p.c, respectively, reported in Q1FY25.

ICICI Financial institution, India’s second-largest private-sector lender, posted a strong 14.5 p.c YoY enhance in internet revenue to ₹11,746 crore for Q2FY25, pushed by sturdy development in non-interest earnings, payment earnings, and treasury features. Sequentially, the financial institution’s internet revenue rose 6.21 p.c. ICICI Financial institution’s NII grew 9.5 p.c YoY to ₹20,048 crore in Q2FY25, supported by stable advances development. Nonetheless, the financial institution’s NIM decreased to 4.27 p.c in Q2FY25, down from 4.36 p.c within the earlier quarter and 4.53 p.c in Q2FY24.

HDFC Financial institution vs ICICI Financial institution: Which personal financial institution inventory must you decide in the long run?

Specialists from main brokerages weigh in on the strengths and prospects of those banking giants to assist traders make an knowledgeable selection.

Shrikant Chouhan, Head of Fairness Analysis, Kotak Securities prefers HDFC Financial institution for long-term funding, citing 4 key elements:

1) An enhancing liquidity surroundings that positions the financial institution to optimize its operations successfully.

2) A proactive technique to cut back its Credit score-Deposit (C-D) ratio.

3) Clear credit score development targets to instill investor confidence.

4) Enticing valuations that reduce draw back dangers whereas providing upside potential.

Dnyanada Vaidya, Analysis Analyst – BFSI, Axis Securities holds a good view of each banks however leans in direction of HDFC Financial institution. Vaidya notes that HDFC Financial institution’s technique to concentrate on decreasing its Mortgage-to-Deposit Ratio (LDR) will bolster its monetary power in the long run, even when credit score development moderates quickly. Furthermore, its pristine asset high quality, even in a difficult market surroundings, underscores its sturdy underwriting practices. Vaidya emphasizes that HDFC Financial institution’s emphasis on worthwhile development and robust danger calibration bodes properly for Return on Property (RoA) enchancment.

Narendra Solanki, Head of Basic Analysis, Anand Rathi Shares and Inventory Brokers additionally favors HDFC Financial institution for its regular margins and enhancing gross slippages. He notes that at practically 3 times its guide worth, HDFC Financial institution presents enticing valuations, given its historic high quality of earnings. Nonetheless, he acknowledges ICICI Financial institution as a short- to medium-term choice as a result of its superior C-D ratio and enhancing credit score prices.

Whereas HDFC Financial institution has emerged as a favourite amongst analysts for long-term investments, ICICI Financial institution is just not with out advantage. With its stable monetary metrics, together with enhancing credit score prices and a strong C-D ratio, the financial institution stays a formidable selection for medium-term development. Analysts notice its means to maintain headline Internet Non-Performing Property (NPA) enhancements, positioning it properly within the personal banking sector.

Technical View

Mandar Bhojane, Fairness Analysis Analyst, Alternative Fairness Broking has additionally recognized HDFC Financial institution as a technically and basically sturdy funding.

He highlights the inventory’s breakout from a chronic consolidation vary and its bullish momentum, supported by rising volumes. With the Relative Energy Index (RSI) at a robust 68.34, Bhojane predicts vital upside potential, concentrating on ₹2,200 and ₹2,400 within the brief time period, with speedy assist at ₹1,700.

ICICI Financial institution, alternatively, buying and selling at ₹1,330, is nearing a breakout from a chronic consolidation part, marked by larger highs, larger lows, and rising volumes, signaling bullish momentum. The RSI at 64.44 helps this optimistic development, with a transfer above ₹1,350 doubtlessly concentrating on ₹1,450 and ₹1,550. Speedy assist is at ₹1,280, providing an entry level, whereas a stop-loss at ₹1,230 might help handle dangers. The technical setup signifies sturdy potential for upward motion.

Share.Market’s Take

Each HDFC Financial institution and ICICI Financial institution are well-positioned to learn from the Reserve Financial institution of India’s current choice to chop the Money Reserve Ratio (CRR) to 4 p.c. This coverage transfer is anticipated to boost liquidity and drive credit score development throughout the sector.

An element evaluation carried out by Share.Market analysis assigns HDFC Financial institution an ideal rating of 5/5 throughout momentum, worth, high quality, volatility, and sentiment. In the meantime, ICICI Financial institution scores 5/5 on worth, volatility, and sentiment, and 4/5 on momentum and high quality, highlighting its sturdy fundamentals.

In abstract, for long-term traders, HDFC Financial institution emerges as the popular selection as a result of its market management, constant efficiency, and strategic concentrate on profitability and asset high quality. Nonetheless, ICICI Financial institution’s sturdy medium-term outlook, backed by operational efficiencies and improved credit score metrics, makes it a compelling decide for these searching for shorter funding horizons. Traders are suggested to align their selections with their monetary objectives and danger urge for food, as each banks provide promising alternatives in India’s thriving personal banking sector.

Disclaimer: The views and suggestions made above are these of particular person analysts or broking corporations, and never of Mint. We advise traders to examine with licensed specialists earlier than taking any funding choices.