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Buy HDFC Bank target of Rs 1870: Prabhudas Lilladher

Prabhudas Lilladher is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 1870 in its research report dated July 19, 2021.

July 22, 2021 / 02:35 PM IST
 
 
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Prabhudas Lilladher's research report on HDFC Bank


HDFCB’s earnings profile of Rs77.3bn was lower than estimates (PLe: Rs79.8bn) led by a much weaker than expected NII growth of 9% YoY despite a loan growth of 14% YoY. NII profile has remained weaker than loan growth for some time now but unfavorable mix on high liquidity & non-retail focus is reflecting much higher. In our view, HDFCB will continue to face near term setbacks with difficult operating environment leading to weaker cross cycle NII of 12% YoY, higher slippages of 200bps and volatile earnings of 17-18%. Although, bank has a strong balance sheet with PCR of 67-70% and ability to absorb higher credit losses, 60bps of contingency provisions and restructuring <1%.


Outlook


HDFCB earnings should improve as visibility remains high post pandemic leading to superior ROEs of 17-18% over FY23-FY24E and is best in the industry. We retain BUY with revised TP of Rs1,872 (from Rs1,735) as we roll over to Sep-23 ABV and retain our multiple of 3.6x.


For all recommendations report, click here

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first published: Jul 22, 2021 02:35 pm
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