Buy HDFC Bank; target of Rs 2192: Geojit Financial Services

Geojit Financial Services research report on HDFC Bank

Incorporated in August 1994, HDFC Bank provides a range of financial services including corporate and retail banking, custodial services, treasury and capital markets, project advisory services, and capital market products. In Q4FY25, HDFC Bank saw a notable 9.2% YoY increase in interest income to Rs. 86,779cr. The growth was primarily fuelled by a significant rise in interest generated from lending activities that was up 4.8% YoY and substantial increases in investment-related income (+23.5% YoY) and other banking funds (+49.5% YoY). Net interest income (NII) rose 11.3% YoY to Rs. 39,793cr driven by strong loan growth. Net interest margin (NIM) was stable at 3.54%. Pre-provisioning operating profit fell 6.9% YoY to Rs. 29,379cr, primarily due to a 25.5% YoY decline in other income. Nevertheless, the bank's operational efficiency showed improvement, with a 10.6% drop in operating expenses and cost-toincome ratio improving to 39.8% (down 150bps YoY). Reported profit after tax (PAT) ultimately rose 6.9% YoY to Rs. 18,835cr, driven by a substantial 72.4% YoY reduction in provisions, which was largely attributed to the improvement in asset quality.

Outlook

Therefore, we reiterate our BUY rating on the stock, based on 2.6x FY27E BVPS, with a revised target price of Rs. 2,192.

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