Buy HDFC Bank; target of Rs 1400 : Motilal Oswal

HDFC Bank (HDFCB) reported a strong performance, with advances growth driven by corporate; select retail segments also showed signs of recovery, with credit card growing at 6% QoQ. Operating performance remained stable, led by steady business growth and cost control. However, margins moderated 20bp QoQ on account of higher liquidity and a change in the asset mix. The bank further shored up provisions as it provided for INR23b toward potential NPA (not declared due to the SC order) and other contingent provisions.

We estimate a 19% PAT CAGR over FY20–FY23E, with ROA/ROE at 2.0%/17.8% for FY23E. Maintain Buy, with revised TP of INR1,400 (3.1x Sep’22E ABV).