Buy HDFC Bank; target of Rs 2200: ICICI Securities

ICICI Securities research report on HDFC Bank

HDFC Bank (HDFCB) reported Q4FY25 PAT of INR 176bn (RoA steady at ~1.9%) led by stable core NIM QoQ and contained opex. Deposits growth (14% YoY) remains driven by term deposits (20% YoY) while CA grew 18% QoQ (up 1% YoY) due to seasonality. Reported NIM (up 11bps to 3.73%) was aided by INR 7bn of interest on IT refund while asset quality was stable. Adjusted for IT refund, NII growth was reasonable at ~3% QoQ (up 8% YoY), as against loan growth of 4% QoQ (up 5% YoY). Core NIM is broadly stable at ~3.65%, though could have been favourably impacted by strong CA jump and lower agri slippages. Opex growth (7% YoY on adj. basis) remains calibrated and continues to offer cushion against moderating revenue growth. Adj. core PPOP growth was reasonable at ~5% QoQ (10% YoY). LCR dipped to 119% (vs 125% QoQ).

Outlook

We see HDFCB delivering steady ~1.8% RoA for FY26E, rising to ~1.9% by FY27E. Maintain BUY with a revised target price of INR 2,200 (vs. INR 2,100), valuing the core banking book at ~2.4x (~2.3x earlier) FY27E ABV and INR 279 for subsidiaries.