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Goldman Sachs sees HDFC Bank's market cap to double by FY20, raises target by 15%

The broking firm expects the bank to race towards the USD 100 billion market cap by FY 20E driven by doubling of profits to USD 5 billion by FY21E as it leverages the market share shift from state-owned banks.

June 09, 2017 / 09:57 AM IST
HDFC Bank (Image: PTI)

HDFC Bank (Image: PTI)

 
 
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Broking firm Goldman Sachs has a positive outlook on HDFC Bank with a 15 percent upside over a period of one year and a target price of Rs 1892.

The broking firm expects the bank to race towards the USD 100 billion market cap by FY 20E driven by doubling of profits to USD 5 billion by FY21E as it leverages the market share shift from state-owned banks, the retail under-penetration using its large distribution network, highest efficiency among retail peers, and low cost of funds and a shift of financial savings from deposits to other products.

Goldman Sachs sees potential for market cap rising to around USD 137 billion, assuming valuations rerate on potentially higher growth and best-in-class profitability.

In an interview with CNBC-TV18's Latha Venkatesh, HDFC Bank's Managing Director Aditya Puri said that the bank is in a sweet spot and the best is yet to come.

One is seeing rise in sales of commercial vehicles, cement and cars, says Puri. Although there have been no great signs of capex in recent times, renewable energy has seen a lot of demand and one has seen pickup in road orders and demand for commercial equipment.

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The Bank’s domestic loan portfolio at Rs 538642 crore as of March 31, grew by 23.7 percent over March 31, 2016. The domestic retail loans and wholesale loans grew by 26.6 percent and 20.7 percent respectively, with the domestic loan mix between retail and wholesale at 53:47.
first published: Jun 9, 2017 09:20 am

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