BackWhat’s making analysts see a new 52-week-high for HDFC Bank post Q2 results?
On Saturday, HDFC Bank announced a 22.30% YoY growth in its consolidated net profit for Q2FY23, coming in at ₹11,125.21 crore as opposed to ₹9,096.19 crore in the same quarter last year.
PremiumOn Saturday, HDFC Bank announced a 22.30% YoY growth in its consolidated net profit for Q2FY23, coming in at ₹11,125.21 crore as opposed to ₹9,096.19 crore in the same quarter last year. The largest private sector bank's standalone net profit jumped around 20% YoY to ₹10,605.78 crore from ₹8,834.31 crore in the same period last year. On Friday the shares of HDFC Bank closed on the NSE at ₹1,446.00 apiece level, up by 3.76% from the previous close of ₹1,393.60. In its last trading session, the stock had recorded a total volume of 6,424,960 shares compared to the 20-Day average volume of 6,448,808 shares. The stock had touched a 52-week-high of ₹1,725.00 on (18-October-2021) and a 52-week-low of ₹1,271.60 on (17-June-2022), indicating that at the current market price the stock is trading 16.17% below the high and 13.71% above the low. However, in light of HDFC Bank's impressive Q2 results, research analysts from various brokerage companies have set a target price of ₹1800 for the stock, which could represent a new high.
The research analysts of the broking firm Sharekhan said “HDFC Bank reported strong business performance in Q2FY2023 in terms of loan growth as well as deposit growth on a YoY basis. The trend remained healthy on a sequential basis as well. Retail loan growth remained steady, while the commercial banking and corporate segments witnessed strong traction and will likely support growth in PPOP. We expect the margin trajectory to recover gradually over FY2023, while steady retail loan growth will be supportive of fee income. The trend in deposits growth also remained strong. Loan-to-Deposits ratio improved to 88.4% from 86.9% QoQ and 85.2% YoY. The bank purchased loans aggregating Rs.91.5 billion in 2QFY2023, through the direct assignment route, under a home loan arrangement with HDFC Ltd."
They claimed in their research report that “We maintain our Buy rating with an unchanged PT of Rs. 1,800. We believe HDFC Bank is on an accelerated growth path with strong advances growth, led by retail, MSME, and corporate 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. The stock has underperformed its peers in the past 12 months. The bank is well capitalised and has the ability to manage its asset quality across cycles and deliver superior return ratios irrespective of economic cycles and reap opportunities from any revival in the economy going ahead. The stock is currently trading at 2.7x and 2.3x its FY2023E and FY2024E core ABV, respectively."
The research analysts of the broking firm Emkay Global Financial Services Limited said “We believe HDFCB will be the key beneficiary of the buoyant credit markets, given its strong retail orientation as well as its increasing inclination towards corporate growth. However, a positive regulatory stance on the impending merger structure and managing the merger without much disruption will be key for re-rating. Currently, the stock trades at 2.4x FY24E ABV (ex-subs valuation). We retain our BUY rating on the stock, with TP of Rs1,800/share (3.0x Jun-24E ABV + subs valuation of Rs78), given healthy return ratios, strong capital comfort and reasonable valuations."
The research analysts of the broking firm Motilal Oswal said “HDFCB reported a steady quarter with recovery in Core PPoP growth and margins though treasury loss dragged PPoP. Loan growth was driven by a sustained momentum in Retail segment, along with robust growth in Commercial and Rural Banking as well as Wholesale loans. Asset quality ratios remained robust, while the restructured book moderated to 53bp of loans. Healthy PCR and a contingent provisioning buffer provided comfort on asset quality. We estimate HDFCB to deliver ~19% PAT CAGR over FY22-24, with an RoA/RoE of 2.0%/17.2% in FY24. Maintain BUY with a TP of INR1,800 (premised on 3x FY24E ABV). We expect the stock to perform gradually as revenue and margin revive further while the merger-related overhang ebbs as HDFCB looks to complete the merger by 1Q/2QFY24E."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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