On Saturday, HDFC Bank announced a 22.30% YoY increase in its consolidated net profit for Q2FY23. 11,125.21 crore as against 9,096.19 crore in the same quarter last year. Largest private sector bank’s standalone net profit jumps nearly 20% y-o-y 10,605.78 crore from 8,834.31 crore in the same period last year. HDFC Bank shares closed on NSE on Friday 1,446.00 each level, up 3.76% from the previous close 1,393.60. In its previous trading session, the stock had recorded a total volume of 6,424,960 shares as compared to the 20-day average volume of 6,448,808 shares. The stock had touched a 52-week high 52-week low of 1,725.00 and (October-2021) (18-Oct-2021) At 1,271.60 (17-Jun-2022), it shows that the stock is trading up 16.17% from the high and 13.71% from the low at the current market price. However, in light of HDFC Bank’s impressive Q2 resultsResearch analysts from various brokerage companies . target price of 1800 for the stock, which could represent a new high.
Research analysts at broking firm Sharekhan said, “HDFC Bank reported strong business performance in Q2FY2023 in terms of credit growth as well as deposit growth on a year-on-year basis. On a sequential basis also the trend remained healthy. Retail credit growth remained steady, while the commercial banking and corporate sectors saw strong traction and will likely support growth in PPOP. We expect the margin trajectory to gradually recover in FY2023, while steady retail loan growth will support fee income. The trend of deposit growth also remained strong. The loan-to-deposit ratio increased to 88.4% from 86.9% QoQ and 85.2% YoY. The bank purchased loans totaling Rs 91.5 billion through direct assignment route in 2QFY2023 under home loan arrangement with HDFC Ltd.
They have claimed in their research report that “We maintain our Buy rating with an unchanged PT of Rs. 1,800. We are sure HDFC bank It is on an accelerated growth trajectory with healthy low-cost deposits as well as strong advance growth led by the retail, MSME and corporate sectors. The bank is expected to grow further from its digital capabilities and continuous building of franchise network. The stock has underperformed its peers in the last 12 months. The bank is well capitalized and has the ability to manage its asset quality across cycles and deliver better return ratios irrespective of economic cycles and to take advantage of any revival opportunities in the economy. The stock is currently trading at 2.7x and 2.3x its FY2023E and FY2024E core ABV, respectively.
Research analysts at broking firm Emkay Global Financial Services Ltd said, “We believe HDFCB will be the major beneficiary of bullish credit markets given its strong retail orientation as well as increasing inclination towards corporate growth. However, the imminent merger A positive regulatory stance on the structure and management of the merger without any disruption will be crucial for re-rating. Currently, the stock trades at 2.4x FY24E ABV (ex-sub valuation). Healthy return ratio, strong capital comfort and reasonable Looking at the valuation, we maintain our buy rating on the stock with a TP of Rs 1,800/share (3.0x Jun-24E ABV + sub valuation of Rs 78).
Research analysts at broking firm Motilal Oswal said, “HDFCB reported a stable quarter with core PPOP growth and margin improvement, though treasury losses dragged down PPOP. Strong in commercial and rural banking as well as wholesale loans. Growth was driven by sustained credit growth in the retail sector as well. The asset quality ratio remained strong, while the restructured book remained confined to 53bp loans. Healthy PCR and a contingency provision buffer provided comfort on asset quality. We estimate HDFC to deliver ~19% PAT CAGR in FY 2012-24, with ROA/ROE of 2.0% / 17.2% in FY24. Maintain BUY with TP of INR1,800 (at 3x FY24E ABV We expect the stock to perform gradually as revenue and margins improve further, while the overhang related to the merger as HDFC looks to complete the merger by eBay 1Q/2QFY24E.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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