HDFC Bank share price slipped in early trade on Monday after the private lender reported strong first quarter earnings last week. HDFC Bank on July 16 reported a 20.9% on-year jump in consolidated net profit to Rs 9,579 crore for the quarter ended 30 June 2022. Meanwhile, Net interest income (NII) stood at Rs 19,481.40 crore, up 14.5 per cent on-year. HDFC Bank shares were quoting at Rs 1,357.95, down Rs 5.90 or 0.43 percent on the BSE intraday. So far this year, the stock has plunged over 11 per cent, underperforming even benchmark Nifty 50. However, analysts remain bullish on the stock and see up to 32% potential rally going forward.
Should you buy, hold or sell HDFC Bank shares?
Edelweiss: BuyTarget price: Rs 1,730
According to analysts at Edelweiss Securities, HDFC Bank’s Q1FY23 was strong with core PPOP growth of 15% YoY/2% QoQ, 2% higher than their estimate, driven by lower opex. PAT grew 19% YoY/ declined 9% QoQ, 3% lower than their estimate due to higher trading loss of Rs 13bn. HDFC Bank remains Edelweiss Securities’ top pick with its strong execution track record and liability franchise-which becomes more valuable when rates rise. “We expect merged RoE to catch up with standalone RoE by FY27E and cut our target multiple from 3.2x to 3x BV Sep-23. We expect a re-rating as markets find comfort in the merger math,” the brokerage said. It maintains buy call on HDFC Bank stock with a target price of Rs 1,730 per share.
Sharekhan by BNP Paribas: BuyTarget price: Rs 1,800
Analysts at Sharekhan believe that HDFC Bank is on an accelerated growth path with strong advances growth, led by retail and small and medium business segments along with healthy low-cost deposit mobilisation. “The bank’s continuous building up of its digital capabilities and franchise network is likely to bode well for growth going ahead”, they said. The lender is well-capitalised and has the ability to manage asset quality across cycles and deliver superior return ratios irrespective of economic cycles and reap opportunities from a revival in the economy going ahead, they added. “Maintain buy rating with an unchanged price target of Rs 1,800,” the brokerage said.
Prabhudas Lilladher: BuyTarget price: Rs 1,740
According to analysts at the domestic brokerage house, HDFC Bank saw a good quarter with core earnings beating estimates led by better NII and other income (excluding treasury). NIM was higher by five basis points due to superior yields driven by strong sequential retail credit growth of five percent. “With increased focus on retail and the merger in progress, opex might remain elevated over the medium term. Asset quality saw a blip due to higher slippages of which 25 percent were attributable to OTR and agriculture, although recoveries were higher,” they said. Prabhudas Lilladher remains positive on HDFC Bank even though near term focus would remain on the merger and subsequent conditions. “We maintain multiple at 3.2x on Mar’24 adjusted book value and target price at Rs 1,740. Retain buy,” the brokerage said.
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