Buy HDFC Bank; target of Rs 2000: Emkay

Emkay is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 2000 in its research report dated July 21, 2024.

Broker Research

July 24, 2024 / 12:57 IST

Buy

Emkay's research report on HDFC Bank

HDFC Bank disappointed on deposit growth in Q1FY25, after a stellar uptick in Q4FY24 due to run-down in its CA pool as well as a conscious run-down in bulk deposits. However, the bank managed to report slight NIM improvement of 3bps QoQ to 3.66%, likely defying the industry trend. That said, lower treasury gains led to 3% PAT miss at Rs162bn. Going forward, Bank has guided to further calibrate credit growth (lower than deposit growth), reduce its high LDR to premerger levels, mobilise PSL (organically/inorganically), and still manage margins aided by improving portfolio mix and funding cost by gradually retiring eHDFCL’s high-cost debt. Thus, we have cut our credit growth estimates over FY25-27 to 10-12% from 12-14%, partly offset by contained credit cost, thereby leading to earnings cut of 2-6%. However,

Outlook

we retain BUY with TP of Rs2,000/sh, rolling fwd on 2.4x Jun-26E standalone bank ABV and better subs valuations (Rs270/sh vs Rs250 earlier). We believe incremental deposit mobilization and IPO of HDB Fin Services will be key near-term monitorables.

For all recommendations report, click here