Buy HDFC Bank; target of Rs 2025: Prabhudas Lilladher

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26 Aug, 2025 12:21

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HDFCB at its analyst meet clarified certain aspects relating to merged financials. While transition to IRAC, credit policy harmonization and creation of DTL reserve would impact BVPS by 5%, gains emanating from stake sale of Credila could cushion capital by 1.2%. Creation of excess liquidity could affect Q2’24 NIM, although margins should bounce back in H2FY24E as credit growth picks up and liquidity is utilized. FY24 NIM could contract YoY from 3.8% to 3.6%, however, as higher cost liabilities of HDFCL are replaced, NIM could enhance over FY24-26E from 3.6% to 3.8%. Merged loans/deposits as at Q1’24 were Rs22.2/20.6trn suggesting a 13%/16% YoY growth. While core earnings growth would be muted for FY24E (5.2% YoY) as NIM and loan growth normalize, core PAT may witness a 19.4% CAGR over FY24-26E.

Basis core RoA at 1.75% for FY26E (ICICIB 1.94%) we tweak multiple from 3.0x to 2.8x but roll forward to core Sep’25 ABV. Retain BUY with TP at Rs2,025.

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