Buy HDFC Bank; target of Rs 1,950: Motilal Oswal

Motilal Oswal is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 1,950 in its research report dated April 21, 2024.

Broker Research

April 22, 2024 / 22:55 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on HDFC Bank

HDFCB delivered a healthy quarter, with NIMs improving 4bp QoQ and the CD ratio declining 6% QoQ to 104%. PAT (adj. for one-offs) and NII both stood in line with our estimates. The bank prudently deployed the stake sale gains from Credila (INR73.4b) and tax credit to further strengthen the balance sheet as it made floating provisions of INR109b during the quarter. Opex jumped as the bank made INR15b of staff ex-gratia provisions; however, the adjusted C/I ratio stood at 41.3%.

Outlook

HDFCB reported in-line adjusted earnings in 4Q, characterized by margin, CD ratio and LCR improvement. Loan growth was modest as the corporate book saw a decline, while growth in retail and CRB remained healthy. Asset quality ratios stood stable, while PCR declined marginally to 74%. The bank has bolstered floating provisions and hence total floating and contingent provisions stand at healthy 1.1%. The bank refrained from giving any specific growth guidance as it is focusing on improving its CD ratio and replacing HDFC borrowings, which are coming to maturity. The gradual retirement of high-cost borrowings, along with an improvement in operating leverage, will boost return ratios over the coming years. We estimate HDFCB to deliver a steady 18% CAGR in deposits and sustain a 13.5% CAGR in loans over FY24-26. We thus estimate HDFCB to deliver an FY26 RoA/RoE of 1.9%/15.5%. Retain BUY with a TP of INR1,950 (2.4x FY26E ABV + INR253 for subs).

For all recommendations report, click here