Buy HDFC Bank; target of Rs 2454: Edelweiss

Edelweiss is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 2454 in its research report dated April 21, 2018.

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April 23, 2018 / 17:34 IST

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Edelweiss' research report on HDFC Bank

HDFC Bank’s Q4FY18 earnings sustained 20% YoY growth momentum but core operating profit growth was softer—up <25% versus 30% plus over the past couple of quarters. The miss was due to sharp moderation in loan growth (sub-20% YoY); surprising given better market opportunities in corporate segment (PSU fallout). Meanwhile, deposits grew a strong 13% QoQ, which along with capital raising will provide growth runway to the bank.

Outlook

Best-in-class liability franchise, expansion of rural/semi-urban branches and improvement in productivity owing to digital focus will ensure the bank delivers above-industry earnings growth—>25% CAGR over FY18-20E—and sustains superior return ratios (RoA of 2%). We maintain ‘BUY/SO’ with TP of INR2,454 (at 4x FY20E P/ABV).For all recommendations report, click here

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