The shares of the leading financial services provider gained up to 1.6 percent after Motilal Oswal, a well-known brokerage recommended a ‘buy’ rating.
With a market capitalization of Rs 11.45 lakh crore, the shares of HDFC Bank Ltd were trading at Rs 1,508.50 apiece, decreasing around 0.16 percent as compared to the previous closing price of Rs 1510.95 per share.
Looking into HDFC Bank’s performance, revenue increased by 67 percent from Rs 47,548 crore in Q3 FY23 to Rs 79,434 crore in Q3 FY24. During the same period, net profit increased by 42 percent, from Rs 12,634 crore to Rs 18,013 crore.
As of March 31, 2024, the CASA ratio of HDFC Bank Ltd was 38%, and Net Non-performing assets were at 0.33% of net advances as of March 31, 2024.
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the bank stock with a target price of Rs 1,950, indicating a potential upside of 29 percent from Thursday’s price of Rs 1,508.50 per share.
Here is the rationale behind the bullish potential upside target:
● NII increased by 2% QoQ to Rs 290.8b, driven by slightly higher loan returns and steady funding costs. Other revenue increased significantly due to Credila share sale profits, while core fee income increased by 21% year on year and 15% quarter over quarter. In FY24, PAT increased 38% YoY to Rs 608b, compared to Rs 441b (without merger) in FY23.
● Loan growth was 1.6% quarter over quarter, driven by positive developments in retail and Credit Reference bureaus (CRB). The corporate segment saw a sequential drop. Deposit growth was strong at 7.5% QoQ, and the CASA ratio improved by 50 basis points to around 38%.
● The progressive retirement of high-cost borrowings, along with increased operational leverage, will raise return ratios in the coming years. The brokerage expects HDFCB to provide a consistent 18% CAGR in deposits and a 13.5% CAGR in loans in FY24-26.
● HDFCL plans to use deposits to meet bond maturities, possibly reducing LDR. It made floating provisions in Q4 to strengthen the balance sheet, with 50bp of loans covered. Margin will be influenced by deposit costs and business mix. Branch expansion continues, considering various factors.
● The GNPA/NNPA ratios improved to 1.2%/0.3%, with additional slippages being under control at Rs 73b or 1.2% of loans. PCR was healthy at 74%.
HDFC Bank is a publicly traded banking corporation that was founded in August 1994. The bank offers a variety of banking and financial services, including retail banking, wholesale banking, and treasury operations.
Written by:- Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
