Prabhudas Lilladher's research report on HDFC Bank
Our update released on 6th July’22 (link) had covered merger related aspects like liabilities’ glide path, asset mix, regulatory requirements and profitability. Discussions with investors on this merger update brought to light certain queries, following which we met HDFCB management to allay these concerns viz. 1) garnering higher market share in system deposits, 2) grandfathering of HDFC’s bank borrowings, 3) share of unsecured loans in the merged entity, 4) drag on NIM due to PSL shortfall and 5) outlook on NIM/opex. We believe that faster deposit accretion for HDFCB from a system standpoint may be achievable, while grandfathering of bank borrowings may be permitted. Unsecured share in the merged entity might remain between 11-12%, as mortgage portfolio (higher ticket size) would grow aggressively. Standalone NIM may gradually improve (4.2% in FY22), as share of retail would rise that may also protect NIM owing to lower PSL requirements. Opex could remain elevated over the medium term. As we slightly raise NII for FY24E/25E, our PAT increases by average 2.5%.
Outlook
Hence we raise SOTP based TP from Rs1740 to Rs1800 basis Sep’24 core ABV but maintain ‘BUY’.
More Info
At 17:30 HDFC Bank was quoting at Rs 1,493.20, down Rs 27.70, or 1.82 percent.
It has touched an intraday high of Rs 1,514.50 and an intraday low of Rs 1,483.00.
It was trading with volumes of 248,622 shares, compared to its thirty day average of 293,073 shares, a decrease of -15.17 percent.
In the previous trading session, the share closed down 0.52 percent or Rs 8.00 at Rs 1,520.90.
The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,271.75 on 18 October, 2021 and 17 June, 2022, respectively.
Currently, it is trading 13.4 percent below its 52-week high and 17.41 percent above its 52-week low.
Market capitalisation stands at Rs 831,239.46 crore.
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