Buy HDFC Bank; target of Rs 1175: Motilal Oswal

Motilal Oswal's research report on HDFC Bank

HDFC Bank (HDFCB) reported 2QFY26 profit at INR186.4b, up 11% YoY (11% beat), led by healthy NII and robust other income. NII grew 5% YoY to INR315.5b (in line). Margins on total assets declined 8bp QoQ to 3.27% (est. 3.24%). Other income stood at INR143.5b (16% beat, 25% YoY growth), led by treasury gains of INR23.9b (INR2.9b in 2QFY25). Provisions grew 29.6% YoY to INR35b (8% higher than MOFSLe). The bank has made additional contingent provisions of INR15b and general provisions of INR7b in 2QFY26.

Outlook

We fine-tune our earnings estimates for FY27 and estimate HDFCB to deliver FY27E RoA/RoE of 1.84%/14.3%. Reiterate BUY with a TP of INR1,175 (2.7x FY27E ABV + INR137 for subs).