Home/ Markets / Stock Markets/  HDFC Bank shares may deliver 23% return, says brokerage. Should you invest?

Shares of private sector lender HDFC Bank may perform gradually as the margin profile revives and the merger-related overhang eases as the bank aims to complete the merger by 1Q/2QFY24, said domestic brokerage house Motilal Oswal Securities in a research note.

The brokerage has maintained a 'Buy' rating on the large cap stock with a target price of 1,930, implying a 23 per cent upside potential from its current levels.

In YTD time, HDFC Bank share price has slipped to 1,563, logging more than 4 per cent loss in 2023. The stock's 52-week high is 1721.85 apiece and 52-week low is 1271.75 apiece, respectively. Its market capitalisation is 8.72 lakh crore.

“HDFCB reported an in-line quarter with increased traction in Core PPoP and NII growth, even as margins remained stable. Loan growth was driven by sustained momentum in the Retail segment and robust growth in Commercial and Rural Banking. Asset quality ratios remained robust, while the restructured book moderated to 42bp of loans. Healthy PCR and a contingent provisioning buffer should support asset quality," the note said.

The brokerage estimates HDFC Bank to deliver a 19 per cent PAT CAGR over FY22-25, with RoA/RoE of 2.0 per cent/17.7 per cent in FY25.

The lender delivered a healthy growth in advances in 3QFY23, led by sustained momentum in retail loans. Growth in commercial and rural banking saw robust trends, even as corporate advances witnessed a QoQ decline.

The brokerage expects loan growth to stay healthy and estimate an 18 per cent loan CAGR over FY22-25. Deposit traction remains healthy, which coupled with a healthy CASA mix, should support the margin trajectory.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Meghna Sen
Business journalist tracking markets, companies, economy and crypto for Livemint. She has 6 years of experience with online and print publications. Email: meghnasen08@gmail.com
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Updated: 20 Mar 2023, 04:09 PM IST
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