HDFC Bank Ltd. share price target

HDFC Bank (HDFCB) reported a largely in-line performance in Q2FY21 with PPOP up 18/8% YoY/QoQ to Rs 37,035mn and PAT with similar growth rate of 18/12.8% YoY/QoQ to Rs 75,131mn. Loan book growth (~16%), strong treasury and continued costs controls (C-I at 36.8%) drove the operational performance.

Outlook and Valuation: HDFCB continued to report steady and in-line performance amid challenging environment.

HDFC Bank's proforma GNPA remain stable at 1.37% vs 1.36% QoQ; reported GNPA declined to 1.08%. Bank reported collection efficiency at 97% in September month which seems to be the best in the industry under current environment conditions. Profitability (PBT) impacted by contingent provisions (Rs.23bn) related to Covid-19 impact. PAT grew by 18% YoY due to lower effective tax rate (25.7% vs 29.5% YoY) as PBT grew by 12% YoY. NII grew by 17% YoY against a loan growth of 16% YoY ; margins decline due to higher liquidity. PPoP grew by 18% YoY as cost to income ratio improved (37% vs 39% YoY); fee income declined by 3% YoY as bank lost Rs.7bn on account of...