Buy HDFC Bank; target of Rs 1931: Geojit

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Geojit's research report on HDFC Bank

HDFC Bank was incorporated in August 1994. It 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. NII grew 14.3% YoY in Q2FY22, on higher interest income (+5.6% YoY) and lower interest costs (-4.1%). Non-interest income was also up 18.2% YoY. Provisioning rose 6.6% YoY. PAT ended at Rs. 9,120cr (+18.3% YoY). In Q2FY22, GNPA/NNPA stood at 1.35%/0.40% (vs. 1.47%/0.48% in Q1FY22). Effect of RBI framework restructuring is 150bps of advances.

Outlook

Although the impact of RBI framework restructuring has a peak potential of 10-20bps on NPAs, bank has taken necessary steps to de-risk Balance Sheet. Given positive outlook, we reiterate our BUY rating and value the stock at 3.9x FY23E BVPS with a revised target price of Rs. 1,931.

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