Moneycontrol PRO
UPCOMING EVENT:Moneycontrol Pro & Espresso (A Sharekhan Company) in association with Intrazon 2.0 bring to you India’s Largest Retail Intraday Traders Online Conference. Learn 12 Amazing Strategies from 12 Intraday Traders @ Rs. 600/-. Register Now!

Buy HDFC Bank; target of Rs 2050: Emkay Global Financial

Emkay Global Financial is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 2050 in its research report dated October 17, 2021.

October 18, 2021 / 02:58 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Emkay Global Financial's report on HDFC Bank


HDFCB reported a slight miss on profits at Rs88bn (est: Rs89bn) in Q2FY22, mainly due to lower NIMs (4.1%), higher staff expenses and accelerated contingent provisions (Rs12bn). The headline NPA ratio improved by 12bps qoq to 1.4% due to lower slippages and better recoveries, but higher restructuring at 1.7% of loans (mainly in PL) was slightly disappointing. Credit growth improved to 15.5% yoy/4.5% qoq due to better traction in retail loans (up 13% yoy) and commercial loans (up 28% yoy). Wholesale loan growth moderated to 6% yoy, but the bank sees improving growth opportunities in the corporate segment. It expects NIM to improve in H2FY22 as retail growth accelerates led by strong demand and receding risk aversion. On-time Recovery (OTR) has improved to pre-Covid levels at 97.5%, leading to moderate net slippages. HDFCB has adopted liberal restructuring (borrower-wise) in the retail segment, but expects a low relapse rate (10-20bps of overall loans). It carries reasonably healthy contingent + floating provisions at 0.8% of loans, which should keep incremental LLP in check.


Outlook


We believe growth acceleration and the lifting of an embargo on the credit card business are positive factors, while further relief on Digital 2.0 initiatives is awaited. Retain Buy with a revised TP of Rs2,050 (valuing core bank at 3.5x Dec'23E ABV and subs at Rs65/share), given its ability to deliver superior return ratios across cycles.


For all recommendations report, click here

Close

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Oct 18, 2021 02:58 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark