Buy HDFC Bank; target of Rs 1420: Geojit

Geojit's research report on HDFC Bank

HDFC Bank was incorporated in August 1994. It provides corporate banking and custodial services and is also involved in treasury and capital markets. In addition, it offers project advisory services and capital market products, including GDR and currency bonds. During Q2FY21, HDFC Bank witnessed further recovery as loans and advances went up 15.8% YoY (+3.5% QoQ), while deposits grew 20.3% YoY (+3.4% QoQ). Operating profit before provisions improved 18.1% YoY (+7.7% QoQ). Core Net interest margin (NIM) stood at 4.1%. Capital Adequacy Ratio improved to 19.1% (vs. 17.5% in Q2FY20). Proforma GNPA/NNPA ratio (adjusted for borrowings not recognised as NPA) stood at 1.37%/0.35% as against 1.36%/0.33% in Q1FY21.

Outlook

Pickup in retail borrowings on the back of upcoming festive season to rally growth in the coming months. We retain our BUY on the stock with an upgraded target price of Rs. 1,420 based on 3.5x FY22E BVPS.

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