Buy HDFC Bank; target of Rs 2050: Emkay Global Financial

Emkay Global Financial is bullish on HDFC Bank has recommended buy rating on the stock with a target price of Rs 2050 in its research report dated April 15, 2023.

Broker Research

April 17, 2023 / 14:35 IST

Buy

26 Aug, 2025 12:21

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Emkay Global Financial's research report on HDFC Bank

Despite the healthy NII growth, HDFCB reported moderate core PPoP growth at 14% YoY, mainly due to higher opex as the bank continues to invest heavily into franchisee network, customer acquisition and ESOP expensing (Rs3bn). However, higher fees including TPD and lower credit cost led to in-line profitability, at Rs120bn (up 20% YoY). Overall credit growth for the bank was moderate, at 17% YoY/6% QoQ, due to some pulldown in retail credit growth (21% YoY) during 4Q, with its portfolio share at 46%. However, deposit growth came in strong (Rs1.5trn) at 21% YoY/9% QoQ, after a sub-optimal growth in 3Q on the back of healthy retail deposit growth in the run up to the merger. Overall NIM stood at 4.3% in 4Q, but the recent deposit acceleration may keep NIMs in check as the full impact is yet to play out. We have slightly cut our FY24E earnings, by 1%, factoring-in the elevated costs, but expect the standalone bank to deliver a superior RoA/RoE of 2%/17-18% over FY24-26E. Bank expects the merger to complete by July 2023, once RBI approval is in place which we believe will be critical from the point of view of the merger’s structure, including clarity on HDFC Life stake/merger of NBFC subsidiaries and regulatory dispensations, if any.

Outlook

Notwithstanding the merger-related regulatory overhang, we believe HDFCB offers the best play on India’s consumption story and is also a good defensive bet in current choppy waters. We retain a long-term BUY, with revised TP of Rs2,050/share vs Rs1,925 (valuing the core bank at 3x Mar-25E ABV) and a subs valuation of Rs87/share.

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