Buy HDFC Bank; target of Rs 1100: ICICI Direct

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ICICI Direct's research report on HDFC Bank

The bank reported steady asset quality with sequential fall in GNPA at Rs 12650 crore & ~16 bps reduction in GNPA ratio to 1.26%. Excluding moratorium provided by RBI, GNPA would have been up 10 bps at 1.36%, still prudent. Till now only low single digit proportion availed moratorium and it can rise. Slippages were Rs 3150 crore (~0.3% of advances).

Outlook

The bank continues to remain a portfolio stock and maintains premium valuations. Accordingly, we maintain BUY and maintain target price at Rs 1100 valuing the bank at ~ 15x FY22E EPS (2.74x FY22E ABV). We include Rs 75 per share for HDB Financial Services.

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