Buy HDFC Bank; target of Rs 2350: ICICI Securities

ICICI Securities's research report on HDFC Bank

HDFC Bank (HDFCB) reported steady Q1FY26 results with PAT of INR 182bn, up 12% YoY, driven by 5% YoY rise in NII. It has utilised one-off gains from HDB stake sale (INR 91bn) and tax credit (INR 11bn) towards floating provisions (INR 90bn) and contingent provisions (INR 17bn). Adjusted RoA was stable at ~1.85%. Opex remains muted despite healthy addition of branches / manpower. Ex-agri, slippages were stable at 1.07% vs 1.02% /1.0% YoY/QoQ. Core NIM declined ~11bps (in line) to 3.35%, though reported was down 19bps. The share of borrowings and LDR continues to improve. Management reiterated its guidance of loan growth rising closer to system for FY26 and above system for FY27. HDFCB remains a beneficiary of sustained surplus systemic liquidity, in our view.

Outlook

The Board has approved an interim dividend of INR 5 and 1:1 bonus. Maintain BUY with an unchanged TP of INR 2,350.