ICICI Securities research report on HDFC Bank
Interaction with senior management of HDFC Bank suggests the bank is well geared to sustain high-teen growth in loans and advances. Visibility continues to be high on its consistent earnings delivery and >2% RoA / >18% RoE for FY23E/FY24E. Nonetheless, the stock has corrected >10% in past one year and underperformed Nifty by ~20% and Bank Nifty by ~7%. It currently trades at <3x FY23E BV at ~2SD discount to 5-year average valuation. Maintain BUY with unchanged target price of Rs1,955. adverse behaviour of restructured pool; ii) lower core fee and higher opex may drag earnings. Geopolitical situation creates macro uncertainties/volatility, but there is no direct impact on the bank’s portfolio and it is continuously assessing the situation. Retail loan growth is at an inflection point and will scale up hereon while momentum will sustain in commercial lending. Strategic and execution focus to effectively implement project Future Ready will start yielding results. Tightened credit architecture will aid medium-term credit cost to settle lower than recent averages. Cumulative creditrelated contingency + floating buffer of 80bps not only makes the bank more resilient for any uncertainties, but also aids in experimenting with some newer products, newer geographies and newer customer profiles.
Outlook
Maintain BUY with unchanged target price of Rs1,955.
More Info
At 15:41 hrs HDFC Bank was quoting at Rs 1,396.00, up Rs 3.90, or 0.28 percent.
It has touched an intraday high of Rs 1,409.00 and an intraday low of Rs 1,373.65.
It was trading with volumes of 215,285 shares, compared to its thirty day average of 379,822 shares, a decrease of -43.32 percent.
In the previous trading session, the share closed up 1.56 percent or Rs 21.35 at Rs 1,392.10.
The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,292.00 on 18 October, 2021 and 08 March, 2022, respectively.
Currently, it is trading 19.04 percent below its 52-week high and 8.05 percent above its 52-week low.
Market capitalisation stands at Rs 773,908.81 crore.
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