Buy HDFC; target of Rs 1410: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's report on HDFC• Standalone PAT came in at Rs 1605 crore, up 18.2% YoY, driven by dividend income that was at Rs 425 crore vs. Rs 104 crore in Q2FY15. Generally, this dividend income (mainly from HDFC Bank) is recorded in Q1. However, this time, it was received in Q2 • NII growth was below expectation at 7.9% YoY to Rs 1924 crore largely due to lower-than-expected growth of 12% YoY to Rs 237991 crore in advances. Reported margins were at 3.95% • Asset quality was steady as expected. GNPA ratio was at 0.71% while absolute GNPA increased by Rs 98 crore QoQ to Rs 1707 crore Outlook and valuationHDFC has commanded premium valuations over the years due to its consistent track record in earnings and business growth. Return ratios have remained healthy across economic cycles with RoE >20% and RoA >2.5%. We expect this to be maintained in FY15-17E. The consolidated PAT as on FY15 stood at Rs 8763 crore with subsidiaries contributing 32%. Even consolidated RoEs have been healthy at ~21%. We have tweaked our earnings estimates slightly lower as we factor in moderation in credit traction & margins. However, we maintain our SOTP based target price of Rs 1410 and our BUY recommendation on the stock, says ICICI Direct research report.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.

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