KR Choksey has given Buy recommendation for HDFC Bank with a target price of Rs. 1720 in its research report issued on Jun 19, 2021
KR Choksey’s research report on HDFC Bank
In Q1FY22, NII grew to INR 17,009 Cr from INR 15,665 Cr in Q1FY21 (8.6% YoY growth) driven by advances growth of 14% YoY. The Bank’s continued focus on deposits helped in maintenance of a healthy liquidity coverage ratio at 126%. PPOP grew 18% YoY at INR 15,137 Cr in Q1FY22 from INR 12,829 Cr in Q1FY21 driven by other income (non- interest income) growth of 54% YoY at INR 6,289 Cr. Provisions for Q1FY22 stood at INR 4,831 Cr, an increase of 24% YoY and 3% QoQ. The GNPA were 1.47% in Q1FY22 vs a comparable 1.32% in Q4FY21. The credit costs was reported at 1.67% in Q1FY22 vs 1.64% in Q4FY21 and 1.54% in Q1FY21. In Q1FY22, the retail loans grew by 9.3% YoY while the commercial banking loans grew by 25% YoY and other wholesale loans grew by 10.2% YoY. The overseas advances constituted around 3% to the total advances. On deposit front, CASA grew 28% YoY while term deposits grew 3.1% YoY. CAR was at 19.1% in Q1FY22 as against 18.9% in Q4FY21, improvement of 20 bps QoQ.
We maintain our target price of INR 1,720 per share, implying a P/ABV of 3.6x FY23E P/ABV, an upside of 16.9% over the CMP. Accordingly, we reiterate our BUY rating on the shares of HDFC Bank Ltd.