Buy HDFC Bank; target of Rs 1385: Prabhudas Lilladher
Prabhudas Lilladher is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 1385 in its research report dated October 18, 2020.
October 20, 2020 / 02:08 PM IST
Prabhudas Lilladher's research report on HDFC Bank
HDFCB’s earnings were marginally lower than expected at Rs75.1bn (PLe: Rs75.9 bn). Miss was from NII, which grew by 17% YoY (PLe: 18% YoY) on slightly sharper NIM decline of 20bps QoQ and slightly higher provisions for strengthening b/s. More or less the commentary has been on positive side with (i) collections at 95% for Sept’20 & 97% for Oct’20, (ii) month on month improving disbursement trends in retail with 2x from Jun’20 and (iii) pick-up in utilization of credit in corporate is suggesting activity coming back to near or above pre-covid levels. Bank is placed in a strong position with prudent provisioning buffers at 0.7% of loans and high PCR of 85% (pro-forma 75%), while should have much lower restructuring & asset quality outcome than industry.
We retain BUY with revised TP of Rs1,385 (from Rs1,265) based on 3.1x multiple as we roll over our valuations to Sep-22 ABV.
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