HDFC Bank Ltd. share price target

With clarity on regulatory dispensations, HDFC Bank, in our view, has crossed a major milestone in its journey towards big-bang merger with parent HDFC Limited. RBI has granted some leeway pertaining to PSL compliance, holding stake in the insurance businesses and LAS business of HDFC Limited though there is no relaxation on CRR, SLR and LCR front.

We maintain our BUY recommendation on the stock.

Deposits outpaced loan growth YoY while a higher cost of funds led to 14bps contraction in NIM to 4.2% in Q4; FY24 NIM guided at 4.1%

HDFC Bank’s (HDFC) Q4FY23 PAT at Rs120.5bn, up 19.8% YoY but down 1.7% QoQ, was broadly in line with I-Sec estimate. NII growth for the four quarters of FY23 averaged 20.4% vs. 11.0% for FY22. On the contrary, opex growth for the four quarters of FY23 averaged 27.2% vs 14.7% for FY22.