ICICI Direct has given Buy recommendation for HDFC Bank with a target price of Rs. 1700 in its research report issued on Apr 18, 2021
ICICI Direct’s research report on HDFC Bank
HDFC Bank’s performance was stable on various parameters like business growth, asset quality and profitability. Business growth continued to show improvement for past three quarters as advances were up 4.7% QoQ, 14% YoY to Rs 1132837 crore. Loan growth was led by wholesale book, which was up 27.1% YoY while retail book increased 6.7% YoY. Within the retail book auto and home loans have shown a sequential pickup while credit card business trajectory has shown a decline due to RBI’s curb on sourcing of new customers. Deposit accretion was healthy at 16.3% YoY and 5% QoQ increase to Rs 1335060 crore. CASA deposits reported even stronger growth of 27% YoY. As a result, the CASA ratio increased from 43% in the previous quarter and 42.2% in previous year to 46.1% in Q4FY21.
Outlook
We broadly maintain our earnings estimate and maintain our BUY rating with an unchanged target price of Rs 1700/share, valuing the core bank at ~3.7x FY23E ABV and adding Rs 50 in lieu of subsidiaries.