Buy HDFC Bank; target of Rs 1360:Edelweiss

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Edelweiss's research report on HDFC BankHDFC Bank’s Q3FY16 PAT at INR33.6bn (up 20% YoY) came in line with our estimate. Key highlights: 1) NII growth maintained momentum (up 24% YoY) on superior loan growth (up >25% YoY) and better NIMs (4.3%, up 10bps QoQ, despite full effect of base rate cut); 2) core operating profit (ex-treasury) came in marginally below trend (sub- 20% growth) owing to slower fee traction (up 11% YoY); 3) liability franchise continued to strengthen -- CASA at 40% (SA grew >20%, term deposit grew >28%); and 4) GNPLs rose marginally to 97bps (still best in class) due to rise in agri and credit cards (change in classification norm by RBI) slippages. The quarter was most critical in terms of asset quality performance (given RBI’s asset classification directive). But, the bank was able to maintain pristine asset quality. The best-in-class liability franchise, marginal stress baggage (no 5:25 refinancing, no SDR) and growth ammunition places it in a sweet spot to capitalise on emerging opportunities. We roll forward to FY18E and maintain ‘BUY’ with TP of INR1,360 (3.5x FY18E P/ABV). Best-in-class liability franchise, expansion of rural/semi-urban branches and improvement in productivity owing to digital focus will ensure that the bank maintains above-industry earnings growth and in turn sustain superior return ratios. The stock is trading at 2.7x FY18E ABV and 14x FY18E P/E. We maintain ‘BUY/SO’. For all recommendations, click here 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.

Read More