Buy HDFC Bank; target of Rs 1910: Arihant Capital

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Arihant Capital's research report on HDFC Bank

HDFC Bank during Q3FY22 has reported strong 18% YoY growth in profit at INR 10,342 cr was higher than our estimate of INR 9,972 cr. NII for the quarter grew by 13% YoY/4% QoQ to INR 18,443 cr driven by credit growth of 16.5% YoY. NIM of the bank stood stable at 4.1%. Operating profit growth for the quarter moderated to 11% YoY to INR 16,776 cr was higher than our estimate of INR 16,524 cr. Moderation in operating profit growth was due to lower fee income growth. Other income growth for the quarter moderated at 10% YoY/11% QoQ to INR 8,184 cr. Provisions for the quarter decreased sequentially by 24% to INR 2,994 cr. As a prudent strategy, Bank has made INR 900 cr contingent provision and carries total cumulative (floating + contingent) provision of INR 10,087 cr (0.8% of loans). Headline NPA ratio improved by 9bps QoQ due to lower slippages and better recoveries.

Outlook

We tweak our estimates marginally and upgrade our rating on the stock to Buy from Accumulate with a revised TP of INR 1,910 (earlier INR 1,935), implying 3.6x FY24E P/ABV.

More Info

At 16:00 hrs HDFC Bank was quoting at Rs 1,521.55, down Rs 23.70, or 1.53 percent.

It has touched an intraday high of Rs 1,556.45 and an intraday low of Rs 1,519.65.

It was trading with volumes of 448,365 shares, compared to its thirty day average of 294,421 shares, an increase of 52.29 percent.

In the previous trading session, the share closed up 1.11 percent or Rs 16.90 at Rs 1,545.25.

The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,342.00 on 18 October, 2021 and 28 January, 2021, respectively.

Currently, it is trading 11.76 percent below its 52-week high and 13.38 percent above its 52-week low.

Market capitalisation stands at Rs 843,303.79 crore.

For all recommendations report, click here

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