Buy HDFC Bank; target of Rs 1200: Motilal Oswal

Motilal Oswal 's research report on HDFC Bank

HDFC Bank (HDFCB) reported healthy business growth in 4QFY20, led by continued strength in its corporate portfolio while retail growth was soft. Operating performance stood flat as margin expansion was offset by lower fee income due to the COVID-19 impact. Further, the bank has made contingent provisions of INR15.5b, which affected earnings. We have fine-tuned our other income estimates factoring in the current trends, which has resulted in ~2% cut each in our FY21E/FY22E earnings. Maintain Buy.

Outlook

We, thus, estimate loan book/PAT to deliver CAGR of 16%/17% over FY20-22E. Management succession remains a big event to watch for. Maintain Buy with PT of INR 1,200 (3.0x Sep’21E ABV).