Buy HDFC Bank; target of Rs 2050: Motilal Oswal

Motilal Oswal's research report on HDFC Bank

HDFC Bank (HDFCB) reported 3QFY25 net profit of INR167.4b (2.2% YoY growth, in line). NII grew 7.7% YoY to INR306.5b (in line). NIMs contracted 3bp QoQ to 3.43%. Other income stood at INR114.5b (3% YoY growth, in line). Opex grew 1.3% QoQ, while the C/I ratio stood flat at 40.6%. Provisions declined 25% YoY to INR31.5b. The bank utilized INR3b of contingent provisions and holds total provisions (floating and contingent) of INR259b. GNPA/NNPA ratio increased 6bp/5bp QoQ to 1.42%/0.46%, respectively. PCR decreased 207bp QoQ to 67.8%. Fresh slippages stood at INR88b (however, excl agri, it stood stable at INR65b).

Outlook

We cut our earnings estimate for FY26/27 by 3% each, reflecting slower loan growth and CASA moderation. We estimate HDFCB to deliver FY26E RoA/RoE of 1.8%/13.9%. Reiterate BUY with a TP of INR2,050 (2.3x FY27E ABV + INR294 for subs).