Accumulate HDFC Bank; target of Rs 1345: Arihant Capital

Arihant Capital recommended accumulate rating on HDFC Bank with a target price of Rs 1345 in its research report dated October 19, 2020.

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October 19, 2020 / 17:24 IST

26 Aug, 2025 12:21

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Arihant Capital 's research report on HDFC Bank

HDFC Bank posted better than expected Q2FY21 results with strong profitability. Net Interest Income stood at Rs 15,776 Cr, increasing by +16.7% YoY/+0.7% QoQ, PPOP stood at Rs 13,814 Cr, increasing by +18.1% YoY/+7.7% QoQ and Net Profit at Rs 7,513 Cr, grew by +18.4% YoY/+13% QoQ. Provisions for the quarter stood at Rs 3,704 Cr as against Rs 3,892 Cr in Q1FY21, with Rs 6,304 Cr of total contingent provisioning for Covid-19 impact which is well in excess of RBI guidelines. On business growth front, the bank’s loan book grew by +15.8% YoY/+3.5% QoQ to Rs 10.38 lakh Cr while deposits grew strongly by +20.3% YoY/+3.4% QoQ to Rs 12.29 lakh Cr on account of bank’s strong customer loyalty. NIM during the quarter contracted by 20bps QoQ at 4.1%, largely due to increased growth in corporate segment book against the retail book’s growth and excess liquidity. The advances growth was driven primarily by the substantial growth in the corporate lending at +27% YoY while retail loan growth slowed to +5% YoY owing to the bank’s strict credit lending measures and visible growth in corporate segment.

Outlook

We revise our estimates upward for the bank’s growth in the near term with loan book growth in double digit for FY21. We assign a P/Adj. BV multiple of 3.6x for FY22 ABVPS of Rs 374 for a target price of Rs 1,345 per share and maintain our ‘ACCUMULATE’ rating on the stock.

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