HDFC Bank Ltd. share price target

We believe HDFCB remains one of the resilient stocks in the sector. We currently have a BUY on the stock with a target price of Rs 1785/share (SOTP basis core book at 3.6x FY23E and Rs 40 Subsidiary Value).

HDFC Bank was incorporated in August 1994. It provides corporate banking and custodial services and is also involved in treasury and capital markets. In addition, it offers project advisory services and capital market products,...

The Net Interest Margins (NIMs) of the bank has remained stable and healthy at 4.2% in Q4FY2021 from 4.2% in the previous quarter and 4.3% in the corresponding quarter last year. The bank has exhibited sharp improvement in CASA deposits ratio to 46.1% end March 2021 from 43.0% a quarter ago and 42.2% a year ago. The business growth of the bank has moderated to 15% with deceleration in deposits as well as...

We believe HDFCB remains one of the resilient stocks in the sector and maintain Buy with revised target price of Rs 1785 (SOTP basis core book at 3.6x FY23Eand Rs 40 Subs. Value).

HDFC Bank reported a stable trend on assets quality and healthy operating performance in 4QFY21. The resumption of NPA recognition has resulted in the reported GNPA ratio of 1.32% (against 1.38% under IRAC norms in the previous quarter). The reported GNPA is in line with...

Refer to important disclosures at the end of this report Accelerated provisions suppress PAT in Q4; constant tech outages remain an irritant Despite stable NIMs and higher fees leading to a beat on PPoP, the bank reported slightly lower PAT at Rs81.8bn (up 18% yoy) vs. est. of Rs83bn, mainly due to additional contingent provisions of Rs8bn amid raging second Covid wave and Rs5bn for interest-on-interest waiver. Retail credit growth remained subdued at 8% yoy due to the bank's cautious stance and the RBI's suspension of new card acquisition. Corporate growth remains very strong, leading to...

HDFC Bank's reported stable GNPA at 1.32% vs 1.38% QoQ while NNPA at 0.4% (0.4% QoQ). However, annualized slippages remain at 1.66% vs 1.86% QoQ. Restructuring under RBI resolution framework stood at 57bps of advances; led by personal loans. Post outages issue, RBI asked HDFC bank to stop launches of new digital business and stops issuing new credit cards. Thus, need to watch for RBI clearance as bank had submitted the plan. Advances saw a growth of 14% YoY vs 15.6% YoY in Q3FY21 led by wholesale loans (21.7% growth) and retail loan growth of 6.7% however wholesale and Retail mix stood at 53:47 vs 50:50 (FY20). Deposits saw a growth of 16% led by CASA growth of 27%. Profitability (PBT...

HDFC Bank (HDFCB) reported a healthy quarter, with advances growth driven by both Corporate and continued revival in the Retail segment. Operating performance remained steady, led by robust business growth, stable margins, and controlled opex. However, the bank made additional provisions of INR13b, resulting in a PAT miss. Asset quality remained stable, while total restructuring stood at 0.6% of loans. The GNPA ratio improved 6bp QoQ to 1.32% (v/s a proforma GNPA...

HDFCB's earnings of Rs81.8bn saw a 6% miss from our estimates (PLe: Rs86.8bn) on higher contingency provisions of Rs13.0bn (Rs8.0bn for asset quality) and slightly slower NII. Although, PPOP saw a 5% beat led by good other income (treasury/recovery from w.off) and controlled opex growth. Asset quality was steady sequentially, although added Rs8.0bn to COVID contingency provisions (non PCR related) to take it to Rs58.0bn or 60bps of loans. High level financial indicators like cash flow improvements, increase in spends and increased customer additions continue to show robustness....

NII growth was decent at 12.6% YoY at | 17120 crore, as NIM declined 10 bps YoY due to excess liquidity. Other income was up 26% YoY, 2% QoQ to | 7593 crore on account of a steep rise in forex income and recoveries. C/I declined from 39.0% to 37.2% YoY but QoQ it was up 110 bps. Provisions stayed elevated at | 4693 crore, as bank parked | 1300 crore as contingent provision in Q4FY21. PAT increased 18.2% YoY to | 8186 crore but was slightly below our estimate due to higher provisions. GNPA ratio, on a reported basis jumped from 0.81% to 1.32% as standstill...