Prabhudas Lilladher's research report on HDFC Bank
HDFCB saw steady quarter; core PAT was 1.5% better to PLe owing to lower opex and provisions while loan growth and NIM were broadly in-line. Overall PCR fell by 2% QoQ to 68%, but PCR ex-agri was stable QoQ at 71%. Focus on reducing LDR continues as despite CRB/retail growth of 2.7%/2.1% QoQ, IBPC sell-down of Rs1.4trn in Q3FY25 remains elevated. As credit accretion is guided to normalize towards system growth in FY26/27E, we expect loan growth of 10%/11% YoY in FY26/27E compared to 3.4% in FY25E. NIM is seeing a drag as cost benefit due to HDFCL liability replacement is being neutralized by CASA reduction.
Outlook
We expect NIM to enhance over FY25-27E from 3.47% to 3.61% since (1) loan growth would be driven by retail and (2) easing system liquidity could reduce funding cost. We tweak multiple to 2.3x from 2.4x on Sep’26 core ABV and revise TP to Rs1,950 from Rs2,000. Retain ‘BUY’.
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