Buy HDFC Bank; target of Rs 1934: KR Choksey

KR Choksey's research report on HDFC Bank

Net Interest Income (NII) for Q3FY25 stood at INR 306,533 Mn, a growth of 7.7% YoY/ 1.8% QoQ, which is aligned with the business momentum. NII was in line with our estimates. Pre-Provision Operating Profits (PPOP) grew 5.7% YoY (+1.2% QoQ) to INR 250,004 Mn, with operating income growing by 6.3% YoY. Net profit for Q3FY25 stood at INR 1,67,355 Mn, a growth of 2.2% YoY (-0.5% QoQ) led by operating performance. The net profit for the quarter met our estimates. We have assigned an Adj P/B multiple of 2.2x (earlier 2.4x on FY26E Adj. BV) on the FY27E Adj Book value for the core banking business and subsidiaries value of INR 223 per share, resulting in a target price of INR 1,934 per share (unchanged), an upside of 17.2% over the CMP.

Outlook

Given the strong merger synergies, stable profitability, and improving operating leverage, we revise our rating on HDFC Bank Ltd. to "BUY" from "ACCUMULATE", as the bank remains well-positioned for long-term growth.