The brokerage says that HDFC Bank shares can give 23% returns. Should you invest?

The brokerage has maintained ‘buy’ rating on the stock. large cap stock with a target value of 1,930, with a potential upside of 23 per cent from its current levels.

In YTD time, HDFC bank share price has fallen 1,563, a loss of over 4 per cent in 2023. Stock hits 52-week high 1721.85 each and is a 52-week low 1271.75 respectively. Its market capitalization is 8.72 lakh crores.

“HDFCB reported an in-line quarter with growth in core PPOP and NII growth even as margins remained flat. Credit growth was driven by continued momentum in retail and strong growth in commercial and rural banking. The asset quality ratio remained strong, while the restructured book narrowed to 42 bp of loans. Healthy PCR and a contingency provisioning buffer should support asset quality,” the note said.

The brokerage estimates HDFC Bank to deliver 19 per cent PAT CAGR over FY22-25, with RoA/RoE of 2.0 per cent/17.7 per cent in FY25.

The lender delivered a healthy growth in advances in 3QFY23 led by continued momentum in retail loans. Growth in commercial and rural banking saw a strong trend even as corporate advances saw a quarter-on-quarter decline.

The brokerage expects loan growth to remain healthy and estimates a loan CAGR of 18 per cent over FY22-25. Deposit traction remains healthy, which coupled with a healthy CASA mix, supports the margin trajectory.

disclaimer, The views and recommendations given above are of individual analysts or broking companies and not of Mint,