The shares of a large-cap private sector bank were trading in the green after Goldman Sachs gave it a buy rating with huge upside potential.
HDFC Bank’s share price saw a heavy decline after the implementation of the Reserve Bank of India’s (RBI) I-CRR (Internal Capital Adequacy Assessment Process with computation of Risk- Weighted Assets) framework.
This framework brought attention to liquidity shortages and raised concerns about deposit accumulation and Return on Assets (RoA). However, Goldman Sachs believes that worries over tepid deposit growth might be overstated.
HDFC Bank managed to maintain the framework and gathered retail deposits worth Rs. 66,600 crore in the June quarter, indicating stability driven by the bank’s strong franchise. Moreover, this development brought back the confidence that the investors had in HDFC Bank.
According to an exchange filing, the bank also re-appointed Sanmoy Chakrabarti as its Chief Risk Officer (CRO) for a further period of 5 (five) years, with effect from December 14, 2023, to December 13, 2028.
HDFC Bank has a market capitalization of Rs. 11,97,123 crore. Its results for Q1FY24 show a significant change in the bank’s latest financial performance. Its revenue for this quarter is at Rs. 61,021.29 crore which increased by 6.7% against Rs. 57,158.84 crore in Q4FY23. The net profit for the June quarter is lower by 1.8% to Rs. 12,403.25 crore. For Q4FY23, the net profit stood at Rs. 12,634.01 crore. The bank has an ROE of 17.24% in this quarter. It has maintained a good three-year average ROE of 16.81%.
Goldman Sachs has a “buy” rating on HDFC Bank with a raised target price of Rs. 2,087 per share. This indicates an upside of 31.44%, as compared to its current share price of ₹ 1,587.75 per share.
HDFC Bank is an Indian bank which specialises in banking solutions for corporate and retail customers. It is one of the biggest bank and loan providers in the country with more than 8% market share. Established back in August 1994, the bank provides services such as wholesale and retail banking, auto and two-wheeler loans, treasury, collateral-based loans, personal loans, and more.
Written by Bhumika Khandelwal
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