Motilal Oswal's research report on HDFC Bank
HDFCB reported an in line quarter, with NII/PPOP growth of 13%/10.5% YoY. PAT grew 18% YoY to INR103.4b (in line). Profitability stood stronger despite the bank creating additional provisions of INR9b, taking the total buffer to ~INR86.4b (~70bp of loans). The bank witnessed a healthy pickup in business as loans grew 5.2% QoQ. The Retail segment grew 13.3% YoY, while Commercial and Rural Banking rose at a robust 29.4%. CASA deposits grew 24.6% YoY and the mix now stands at 47.1% (+30bp QoQ). On the asset quality front, GNPA/NNPA ratio improved by 9bp/3bp QoQ to 1.26%/0.37%, with slippages at INR46b (1.6% of loans). The restructured book moderated to ~1.4% of loans (v/s 1.5% in 2QFY22). The management said the net impact of the restructured book on NPAs is likely to be 10-20bp. Healthy provision coverage, along with a contingent provision buffer, provides comfort on asset quality.
Outlook
Healthy provisioning coverage and a contingent provision buffer provide comfort on asset quality. Pick up in loan growth, particularly Retail, would aid NII and margin, which would drive profitability in the coming quarters. We estimate HDFCB to deliver ~20% PAT CAGR over FY22-24E, with a RoA/RoE of 2.1%/18.1% in FY24E. We maintain our Buy rating with a TP of INR2k (3.6x Sep’23E ABV + INR119 from its subsidiaries).
More Info
At 16:00 hrs HDFC Bank was quoting at Rs 1,521.55, down Rs 23.70, or 1.53 percent.
It has touched an intraday high of Rs 1,556.45 and an intraday low of Rs 1,519.65.
It was trading with volumes of 448,365 shares, compared to its thirty day average of 294,421 shares, an increase of 52.29 percent.
In the previous trading session, the share closed up 1.11 percent or Rs 16.90 at Rs 1,545.25.
The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,342.00 on 18 October, 2021 and 28 January, 2021, respectively.
Currently, it is trading 11.76 percent below its 52-week high and 13.38 percent above its 52-week low.
Market capitalisation stands at Rs 843,303.79 crore.
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