Buy HDFC Bank; target of Rs 1920: Sharekhan

Sharekhan's research report on HDFC Bank

As per HDFC Bank’s Q4FY2023 business update, total advances grew at a healthy pace of 16.9% y-o-y. Sequentially, advances growth picked by 6.2% in Q4FY2023 vs. 1.8% in Q3FY2023 to Rs. 16 trillion. According to the bank’s internal classification, retail loans grew by 21% y-o-y/5% q-o-q. Commercial and rural banking continued to remain strong (up 30% y-o-y/9.5% q-o-q). Corporate and other wholesale loans also witnessed 12.5% y-o-y/4.5% q-o-q growth. The bank’s deposit base rose by 20.8% y-o-y/8.7% q-o-q to Rs. 18.8 trillion. CASA deposits grew by 11.3% y-o-y/9.6% q-o-q. CASA mix marginally increased by 40 bps q-o-q to 44.4%. Retail/wholesale deposits grew by 23.5%/10.0% y-o-y and 7.5%/15.5% q-o-q.

Outlook

At the CMP, the bank trades at 2.7x and 2.3x its FY2024E and FY2025E Core BV, respectively. We maintain our Buy rating on the stock with an unchanged PT of Rs. 1,920.