Brokerage firm Citi has resumed its coverage on HDFC Bank Ltd with a 'buy' rating and kept its target price at Rs 2,200 a share. Earlier the brokerage house has suspended coverage on the stock, according to Bloomberg data.
The brokerage house believes that HDFC Bank has ample room for growth in the home loan sector, which could drive a compound annual growth rate (CAGR) of over 20 percent. The bank has significant opportunities to penetrate the market further.
Additionally, the portfolio rebalancing and an increased addressable market offer an expanded opportunity for HDFC Bank to capitalize on.
After the merger, as the brokerage house expects, there will be 18 percent growth in advances and 3.8 percent in net interest margin over FY23-26. Return on assets will hold near 1.9-2 percent, while return on equity will drag during this period.
In a recent notice, MSCI announced that HDFC Bank will replace Housing Development Finance Corp (HDFC) Ltd on MSCI Global Standard indices starting from July 13 after the merger between HDFC and HDFC Bank.
The merger, valued at $40 billion, marks the largest corporate merger in India's history. As part of the merger process, July 13 has been fixed as the record date. On this date, shareholders of HDFC will have the opportunity to exchange their HDFC shares for shares of HDFC Bank.
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