Buy HDFC Bank; target of Rs 1890: Geojit

Geojit's research report on HDFC Bank

Incorporated in August 1994, HDFC Bank 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. • In Q3FY23, higher interest income (9.9% QoQ) was offset by increase in interest expenses (+12.0% QoQ). Resultantly, NIM remained flat at 4.3%. • Advances up 1.8% QoQ and 19.5% YoY while deposits rose 3.6% QoQ and 19.9% YoY. GNPA (1.23%) and NNPA (0.33%) ratios remained stable. • Higher retail loans coupled with pick up in commercial and rural banking would continue to support loan growth in near term. Deposits to remain healthy with healthy CASA mix. We may see marginal improvement in NIM in the near term, and is expected to largely remain stable from thereon owing to strong growth in retail portfolio, which would partially offset higher cost of funds. We therefore reiterate our BUY rating, with a rolled forward target price of Rs. 1,890 based on 2.9x FY25E BVPS.

Outlook

We reiterate our BUY rating on the stock, with a rolled forward target price of Rs. 1,890 based on 2.9x FY25E BVPS.

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