Hold HDFC Bank; target of Rs 650: ICICIdirect.com

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26 Aug, 2025 12:21

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ICICIdirect.com reports on HDFC Bank

HDFC Bank profitability was maintained at 30% YoY growth in line with estimate at Rs 1843.8 crore, despite GNPA addition to the tune of Rs 380 crore in a single quarter and higher provision of Rs 527.1 crore made in the quarter. NII growth was strong at 26.8% YoY vs. our estimate of 22% YoY as NIM improved 10 bps YoY and QoQ to 4.6%. The CASA ratio declined seasonally to 44.7% from 47.4% QoQ. Robust retail franchise is key to the bank in surviving the current phase of short-term rise in cost of funds. Total credit grew 21% YoY to Rs 258589 crore with retail and corporate in proportion of 54:46. The bank factors in most of the positives. We recommend HOLD maintaining a target price of Rs 650.

Return ratios splendid but rich valuations to cap upside in stock

The operating performance still continues to be strong due to healthy NII growth. We believe due to higher floating provisions held to cushion future provisions, profit growth will stay. Return ratios are still better than peers with RoA of 2.1% and RoE of 24.4% for FY14E. At current valuations of 3.4x FY15E ABV, we believe most positives are factored in and one may gradually book profits at higher levels. We continue to recommend HOLD with a target price of Rs 650," says ICICIdirect.com research reports.

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